Private Equity: Bigger Is Better

, The American Lawyer

In 2010 private equity deal lawyers turned a corner. Private equity-backed M&A in North America totaled $103 billion, more than double the dollar sum in 2009, and 33 percent greater than 2008, according to mergermarket. The number of deals was similarly impressive: There were 157 transactions worth more than $100 million in North America, compared to only 74 in 2009.

Simpson Thacher & Bartlett, a perennial private equity leader, had the distinction of topping the league tables for both total dollar amount and number of deals. The New York–based firm advised bidders on 23 buyouts for a total value of $29.3 billion, including the year's largest private equity deal, the $5.3 billion acquisition of Del Monte Foods Company by a Kohlberg Kravis Roberts & Co. L.P.-led consortium. Two firms that regularly lead the pack in number of deals, Kirkland & Ellis and Latham & Watkins, were close behind Simpson in total dollar value of deals as well. Kirkland advised on 22 trans­actions, totaling $13.8 billion. Latham advised on 18 deals, totaling $17.5 billion.

Though the total number of announced private equity transactions was spread equally throughout 2010, private equity lawyers found themselves much busier during the second half of the year. As the spring turned into summer, the banks became more willing to provide leveraged loans, a key component of most private equity buyouts, says Simpson Thacher finance partner Jennifer Hobbs.

The increased availability of leverage, along with uncertainty surrounding potential tax increases in 2011, spurred midyear deal negotiations, say lawyers. From that point on, the large deals kept coming as the high-yield debt market continued to boom and banks became comfortable writing larger and larger checks to finance private equity transactions.

A rash of multibillion-dollar buyouts announced in the summer, such as The Carlyle Group's $3.8 billion buyout of NBTY, Inc., and the $3.1 billion acquisition of Multiplan, Inc., by BC Partners Limited and Silver Lake, gave way to a slew of even larger deals in the fall.

"In May or June, it wasn't clear that you would be able to get three or four billion [dollars in financing], whereas by the end of the year it was a given," says Charles "Casey" Cogut, a senior corporate partner at Simpson. 


CLICK  HERE for the complete Corporate Scorecard 2011 report.


Illustration by Eva Vazquez