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Private Equity Deals Set to Surge in 2011

NEW YORK ( TheStreet) -- Private equity revenues may top the previous year's near-record numbers as firms jockey for new deals, according to industry watchers.

PE firms made $9.9 billion in revenue in 2010, according to Dealogic, which was up from $4.4 billion in 2009.

"There are likely to be a couple of slow months at the start of the year, but the fundamentals of the market are strong," said Hiter Harris, co-founder of middle market investment bank Harris Williams.

"This year will be a good year for private equity. They are incentivized and under a fair amount of pressure and be more aggressive to get the money out before investment deadlines expire," said Dominick DeChiara, private equity practice co-chair of the law firm Winston & Strawn.

In addition, private equity funds are likely to be more aggressive in bidding with strategic buyers this year as corporations get ready to deploy a record amount of cash on their balance sheets.

"We think corporate and PE deals are going to be pretty close. PE was aggressive in 2010, and there will be more so in 2011 and 2012," said Harris. He added that due to opportunities in the market, it is likely that more private equity firms will also start fundraising again this year.

"I think the environment favors strategic deals. There will be more private equity deals this year, but probably not more than strategic," said Randy Schwimmer, senior managing director at Churchill Financial.

LBO activity last year totaled $43.3 billion and Schwimmer expects leveraged buyouts will hit $75 billion this year.

Carlyle Group topped the charts as the number one financial sponsor in 2010, generating $440 million in net revenue in 2010, beating out Blackstone Group (BX - Get Report), which ranked as the top financial sponsor in 2009, according to Dealogics numbers.

Schwimmer predicts that mega deals will start to reemerge, but that middle market deals will likely dominate.

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