As seen in Bloomberg’s “LBO Rut Still Leaves Room for These Buyout Bets: Real M&A”
Bloomberg reports that the number of leveraged buyouts (LBOs) is at an all-time low since 2009, largely due to US stock indexes rising to the highest they’ve ever been. Private equity firms are also facing competition from public companies, who can use stocks to pay for expensive transactions and takeovers.
According to Kaye Scholer Partner Mel Cherney, Co-Chair of the firm’s Corporate Department, in addition to rising equity prices, another reason for the decrease in LBOs is the disappearance of “club deals,” where multiple firms work together to acquire a certain company. For example, TXU Corp was purchased for $45 billion in 2007 by a large group of buyers.
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