2006 - The Year of Private Equity: Over 1,000 U.S. Companies Taken Private

2006: Year of Private Equity

If the '80s belonged to the investment banker, the '90s to the venture capitalists, the first 5 years of the new millennium to the hedge funds, 2006 seem to be the beginning of the private equity power in the financial markets. 

According to this Fortune article, a startling 1,010 U.S. companies were taken private last year through December 13 at a pricetag of $371.4 billion,  compared with 664 deals in 2004 and 324 in 2001, based on Dealogic data. And that easily surpasses $400 billion when add the year-end big deals - Harrah's ($17.1 billion), Biomet ($11 billion) and  Realogy ($6.7 billion). 

Carlyle Group co-founder David Rubenstein summed up the PE era - "(We are) the face of 21st-century American capitalism. American capitalism used to be General Motors and Ford and IBM. Now it's Blackstone and Texas Pacific Group and KKR and Carlyle because we're doing so many things to move the economy."

Several factors have fueled the PE boom include availability of debt, institutional investors allocating more funds to buyouts, and Sarbanes-Oxley to some extent. In the U.S., pension fund managers were allocating closer to 6% to private equity, according to Hamilton Lane. 

Just last month, eleven leading U.S. private equity firms have formed a trade group, the Private Equity Council. In 2006, private equity managers around the world will raise more than $300 billion. Today the estimated available capital of the private equity industry exceeds $700 billion.

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