This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Wanted: a few good sponsor deals

Stocks in this article: BRK.BDELLELN

NEW YORK ( TheStreet) --The new normal for private equity appears to be one where general partners must go their own way, without consortium strategies and a herd mentality to mint a fortune off deal fees.

In the meantime, bankers will have to count on strategics that hoarded cash during the recession to generate their fees. So far into 2013, that hasn't exactly panned out well for banks.

The news is that big private equity deals are dead right now; or at least consortium deals are finished. Instead of mega mergers and acquisitions, the deals that have come to characterize private equity as of late are decidedly unflashy buys: Bain Capital Partners and Golden Gate Capital teaming to buy BMC Software in a $6.9 billion deal, or Kohlberg, Kravis & Roberts $3.9 billion leveraged buyout of industrial machinery maker Gardener Denver.

There has not been a PE deal for more than $10 billion, in the pure traditional sense, since the onset of the financial crisis nearly five years ago.

The notion that the buyout of Heinz is, in fact, a private equity deal is downright absurd: Warren Buffett's Berkshire Hathaway (BRK.B) wasn't just the party with most of the deal's equity. It was his relationships that were crucial in securing financing, as well.

In fact, the contrast between the flurry of strategic deals, such as drugmaker Perrigo's (PRGO) $6.7 billion deal to buy competitor Elan (ELN), the $35 billion mega-merger between Publicis and Omnicom (OMC), and the latest struggling attempt at a mega-LBO (leveraged buy out)--meaning Dell (DELL)--serves as a reminder of how private equity's buying behavior has changed since the financial crisis, when nearly every large-cap PE firm hitched billions onto deals that would go on to tarnish the industry and cost limited partners dearly.

Michael Dell and Silver Lake continue to try to bend their stake into one that would be sufficient to buy Dell. Carl Icahn continues to throw kitchen sink after kitchen sink in the way of their intentions. The latest beef in the ongoing deal saga is Icahn's challenging the LBO team's attempt to rearrange voting rules on the eve of the Aug. 2 shareholder special meeting date.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,749.22 +71.32 0.43%
S&P 500 1,956.96 +6.14 0.31%
NASDAQ 4,463.6010 +10.8090 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs