|Pe deals of the year|
This year, that bias is especially apt. Four years after the financial crisis began, PE firms are again seizing on buoyant capital markets and lofty deal valuations to extract profits. Though still well below 2007 levels, dividend recapitalizations, initial public offerings and portfolio company sales have picked up strongly in recent months.
Accordingly, six of the highlighted deals of the year -- our year going from July 2010 to June 2011 -- involve lucrative outright sales, and a further five are IPOs that yielded handsome partly realized or paper gains. Technology being among the most vibrant sectors during the period, we've included the most spectacular showing in a venture capital-backed IPO: Sequoia Capital's $1.2 billion paper gain on a mere $7 million investment from social networking site LinkedIn Corp.'s market debut last month.
Though a couple of deals entail quick flips (BankUnited Financial Corp. and Blacksmith Brands Holdings Inc.), in several cases the success was hard-won. Burger King Holdings Inc.'s sponsors, for example, achieved a fivefold gain following an elaborate overhaul of the fast-food company's strategy. Sun Capital Partners Inc. earned its 13-fold return in bagel chain Bruegger's Enterprises Inc. by reviving its flagging operations. In Warner Music Group Corp., investors led by Thomas H. Lee Partners LP squeezed out a 100% profit over seven years, notwithstanding a drastic decline in record industry sales.
Cerberus Capital Management LP's sale of blood plasma products maker Talecris Biotherapeutics Holdings Corp. to Grifols SA made the list for the second year running. Last year, we spotlighted the mammoth profit Cerberus stood to rake in. As it turned out, winning government approval for the sale proved to be a long and tortuous slog, which is how Talecris merited a reprise.
At the opposite extreme on the results scale was Guy Hands' buyout of record company EMI Group Ltd. The British financier's PE firm, Terra Firma Capital Partners Ltd., after paying a stratospheric price for EMI in 2007, lost its entire $2.5 billion investment when EMI creditor Citigroup Inc. seized the assets. EMI will go down as one of the biggest private equity fiascoes of all time, which is a noteworthy achievement of sorts.