Feast Along With the Buyout Vultures

The vultures are circling over Wall Street. They have been patient for lo these many months. And now they are smiling, smug and voracious as they come in for the kill.

In a set of moves reminiscent of the 1980s, leveraged-buyout (LBO) partnerships are raising record amounts of money to purchase and privatize wounded but salvageable public companies. They're paying prices that would have been considered insulting a few years ago but look like manna from heaven today, bailing out thunderstruck shareholders and demoralized management groups with the expectation that business-plan tweaks, divestitures and patience will turn an investment of a couple of hundred million dollars now into a billion or more in a few years.

Earlier this month, the Blackstone Group announced it had put together a $6.5 billion buyout fund, the largest ever. That gives the firm more than $10 billion in buying power because it generally invests only 35% in any given deal and borrows the rest. Other firms of its kind -- which now refer to their deals as "private equity" rather than LBOs because of the corporate-raider taint of the latter -- also have built big war chests. Thomas H. Lee Partners raised $6.1 billion last year, and Kohlberg Kravis Roberts & Co. has reportedly raised at least $5 billion for a new fund. ...