Mergers, but No Mania

Why can't the company's management make changes for the benefit of current shareholders to bring the company's value to the level private equity buyers see? The consortium, including Bain Capital, Thomas H. Lee Partners and founding family members, offered a 10.2% premium to control the company.

Later on in the privatization process, companies taken private are sometimes quickly spun back out into the market with little or no changes made, or in worse financial shape. Initial public offerings of companies spun out after an LBO, such as Hertz (HTZ Quote), barely registered a positive return in 2006. But these IPOs clearly lagged behind non-buyout-backed deals, says Richard Peterson, an analyst at Thomson Financial.

Whatever private equity's plans for TXU, the deal might not even hold the largest-ever record for very long. A U.K.-based newspaper ran a story alleging that KKR, Blackstone Capital Partners and the Carlyle Group are interested in taking Dow Chemical (DOW Quote) private for $54 billion, including assumed debt. That beats TXU's deal and even RJR Nabisco's if doubled to account for inflation.

Lastly, if the market can't rally on the biggest merger Monday yet this year, maybe these big deals are signs of a top, not signs of strength.