Merrill Lynch ( MER) can't get enough of private equity.

The Wall Street firm's big plunge into the leveraged-buyout world has been paying off nicely and is a big reason the broker's fourth-quarter earnings soared by 68% to $2.3 billion. And the Wall Street firm is promising to dive into even more private equity deals in the coming year.

But investors better hope that Merrill CEO Stan O'Neal doesn't bite off more than he can chew. It's always easy to sink money into a buyout. The trickier part is finding a profitable exit strategy, especially as buyouts are getting bigger and bigger.

So far, Merrill has had great success with one of its earliest private equity deals, a $748 million investment in the 2005 LBO of rental-car giant Hertz ( HTZ). To date, Merrill has already made back most of the money it put into that buyout and stands to make even more in the coming months, in the wake of Hertz's $1.32 billion IPO in November.

The big success Merrill scored with Hertz is no doubt tempting it to take on even bigger private equity bets.

Last year, it was a player in one of the biggest LBOs of all time, the $33 billion buyout of hospital operator HCA. It is part of the group that wants to purchase Reader's Digest ( RDA) in a $2.4 billion deal.

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