Today a multitude of deals came to light after the holiday weekend:
- Tishman and Lehman are buying Archstone-Smith for $12 billion.
- Avaya is selling off pieces to private equity firms.
- Madison Dearborn is in talks to buy CDW for over $6 billion.
- URS agreed buy the Washington Group for $2.6 billion.
But, even now in the midst of an unequaled private equity frenzy some warning signs are beginning to emerge. Just last week investment bank Goldman Sachs placed a freeze on hiring. Seems odd that amidst record profits and a tons of private equity related fees that Goldman would see fit to "pause" hiring. Many in the private equity world have seen fit to apply the brakes as well. Here are some quotes from the titans in the industry:
- Timothy Collins, CEO Ripplewood Holdings: Current private equity conditions are a "bubble that could end badly."
- David Rubenstein, Carlyle Group co-founder: "There hasn't been a failure for five years. We need to prepare people for the reality that some deals will fail," he said. He added: "Greed has taken over. Nobody fears failure."
- Bill Conway, Carlyle Group co-founder warned his firm's investment professionals about froth in the buyout market and instructed them to be careful in their deal-making.
- Steven Schwarzman, founder of the Blackstone Group warned that the biggest risk in the private equity market is "high prices."
- David Bonderman, founder of TPG: "Almost everything can go wrong now. . .Two years ago, we slowed down. Last year we got unskeptical. This year we are more cautious again."
It seems the only one who hasn't slowed down is Henry Kravis, and it doesn't seem like he has any plans to stop. KKR has been a part of $120 billion of deals this year including 5 of the biggest 8. They probably have a blockbuster or two left in them as well. So while I won't be the fool to call the end of the private equity boom, I do believe a fair number of the deals announced this year will not work out quite as well as they were penciled.
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Today a multitude of deals came to light after the holiday weekend:
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