Odds and ends

What a difference a year makes. In midsummer last July, the credit markets froze, marking an inglorious end to the most extraordinary bull run in leveraged buyout history. Private equity mavens may have recognized the inexorability of the end -- maybe not the shortsightedness of the excesses -- but end it did, ushering in a strange new season of busted buyouts, legal handwringing, protracted negotiations and the occasional sensational completion.

Which brings us to our annual Private Equity Deals of the Year, an eclectic collection if ever there was one. Every year, we reprise the most noteworthy examples of the industry's highs and lows, illuminating some of the more colorful or complex private equity stories of the period. If the previous years have been nirvana for private equity, the past 12 months have been anything but. Among other things, several of the giant take-privates collapsed as financings seized up, clogging the courts with contentious disputes.

PE dealmaking has slowed, while debt-burdened portfolio companies are left scrambling for new capital to get over the hump. Secondary PE buyouts have yielded to strategic buyouts. Dividend recapitalizations, that cash cow that gave so generously to private equity, have all but dried up. And those once stellar exits are now few and far between.

No surprise then that this year's selection of PE deals highlights a few blockbuster exceptions, beginning with Alltel Corp.'s $27.5 billion LBO. Alltel defied all odds by closing amid the banks' disarray, and subsequently letting its sponsors execute a flip to Verizon Wireless within months of the buyout. Then, in the biggest announced LBO in the first half of 2008, two buyout firms showed what their war chests can do when they acquired Bristol-Myers Squibb Co.'s ConvaTec wound therapeutics and ostomy care business for $4.1 billion, half of it equity. That transaction is doubly significant for the parties' meticulous effort to craft as close to an airtight agreement as can be rendered by lawyers, something that pre-credit crunch negotiations plainly overlooked, United Rentals Inc.'s and Clear Channel Communications Inc.'s television unit's buyouts being among the casualties.

We also revisit some success stories -- there weren't many -- as well as disasters. Buffets Inc. and Linens 'n Things Inc. perhaps presage the fate of many PE-backed businesses increasingly caught in a liquidity crisis. Also a harbinger of sorts, TPG Capital's bailout of Washington Mutual Inc., as risky a proposition as it may seem, is an indication that PE investors still find opportunities wherever they can, in far-flung destinations or not, or they invent them if need be. Otherwise, we might as well all retire to the Hamptons.

-- View the complete PE Deals of the Year slideshow --