Taking a quick overview of the changes in the private equity landscape over the last 12 months, Morris commented that the industry has gone from asking, "What will be the first $50 billion LBO?" to asking, "Will banks actually honor their debt committments?"
"The hot topic of the moment is whether the private equity firms that were receiving easy credit terms a matter of months ago will be able to buy back the debt comittments at a discount," said Morris. "However, it's clear that there are a lot of opportunities; sponsors just need to be more resourceful in finding them."
A run down of problem areas included the growing number of portfolio companies in bankruptcy and the buyouts that ended up in litigation. "One of the things that would have been unthinkable a year ago is that so many of these deals have gone to litigation," he commented.
However, on the positive side, the middle market has held up well, and panic in the high-yield bond market has begun to subside with prices rebounding. The result of these trends has been a trickle of new $1 billion-plus buyouts, such as the $1.4 billion take-private of TriZetto Group Inc. by Apax Partners in April and Hellman & Friedman LLC's agreement to pay $2.4 billion for Getty Images Inc. in late February.
"It's good to have capital when other people don't," Morris said when speaking about the opportunities that private equity firms are taking advantage of, such as making equity investments into banks, buying LBO debt well below par and selling their portfolio companies to SPACs. Among the top deals made among financial institutions were investments of $7 billion apiece in Washington Mutual Inc. and National City Corp., as well as the purchase of $12 billion in LBO at 85 cents on the dollar from Citigroup Inc. - George White
Private Capital Symposium data
See the Private Capital Symposium agenda
See story on PE firms buying banks on TheDeal.com
See story on Trizetto on TheDeal.com
See story on Getty Images on TheDeal.com
See feature on debt sales on TheDeal.com
See story on Washington Mutual on TheDeal.com
See story on National City on TheDeal.com
See story on Citigroup debt sales on TheDeal.com
