The difficulty of selecting the 30 most influential private equity deals of all time does not fully hit home until you start sifting through the many bold transactions that the industry has led. There is a very fine distinction between the merely outstanding and the truly extraordinary, and readers may well take issue with some of the choices that we made
Make no mistake – it's tough to pick the deals to enter the all-time hall of fame (or infamy as the case may be) of private equity investment. Just consider the following milestone transactions that would have made it onto a longer list.
Starting with European buyouts, some eyebrows might be raised at the absence of Gala Group, the casino operator that has been in private equity hands for the last eight years under three different sets of owners. In 2003, when the business was sold to current proprietors Candover and Cinven in Europe's first-ever tertiary buyout, original investor PPM Ventures reaped five times its original £50 million investment.
Also close to inclusion was the &€3.7 billion purchase of French electronics manufacturer Legrand in December 2002. It was the largest ever European buyout at the time – another superlative associated with KKR, which in this case invested alongside French private equity firm Wendel Investissement.
For a firm that has its critics, KKR has in fact been involved in a whole raft of noteworthy transactions over the years, as documented throughout these pages.
Another contender for a Best of Private Equity compilation would have to be Wincor Nixdorf, a 1999-vintage investment the firm made in Germany, and from which it has just achieved a partial exit via IPO in a tricky market.
There were also some notable midmarket deals in the running. The privatisation of TV broadcaster and telecom operator NTL by HgCapital (then Mercury Private Equity) in 1991 was an early case study of how a clued up financial investor can transform a company. NTL delivered a 12 times return on capital. Also important was the £350 million buyout of Cannons that Royal Bank Private Equity led in 2001: the deal presaged a stampede of private equity firms into the UK health club sector.
And what about secondaries? Many suggested Coller Capital would be worthy of a mention, not least for its groundbreaking £670 million purchase of funds advised by Bridgepoint Capital (formerly NatWest Equity Partners) in May 2000 alongside Hamilton Lane and Lexington Partners. It was a deal that pushed private equity secondaries into the industry mainstream, and was followed by the perhaps equally notable purchase of a portfolio of venture assets from Lucent at a time when such a transaction seemed daringly contrarian.
In North America, Avis Rent a Car was certainly on the fringes of inclusion. New Jersey-based Wesray Corporation committed just $10 million of equity to the company's $265 million buyout in 1986. A year later, Wesray went on to generate a tax-free gain of more than $750 million, thanks to the exploitation of a fiscal loophole, when the business was sold to an employee stock ownership plan.
Around the same time, Dr Pepper/Seven Up was the deal that turned Tom Hicks into a buyout star. In 1986 Hicks & Haas (the firm Hicks ran with partner Robert Haas) beat off Coca Cola to buy the bottling operations of Dr Pepper for $415 million and Seven Up for $240 million. The combined company was taken public in 1993, generating a 1,200 percent IRR for investors and turning Hicks' personal $1 million bet into nearly $30 million.
Fast forward to the present, and you're reminded that US venture is currently staging a comeback, as a windfall is expected from Google. Kleiner Perkins and Sequoia Capital invested $12.5 million each for around 25 percent of the firm in 1999, and the pair are rumoured to be on course for an 800-fold return on their money in the wake of Google's IPO. Kleiner Perkins had already proved back in 1996 its uncanny knack for finding that rare combination of good ideas and good management with an $8 million investment into Amazon.com that became a huge success.
And the list goes on: Apple, Bundesdruckerei, Ionica, Ebay, Lastminute.com, Willis Corroon and Fairchild Dornier are all names of companies which, for one reason or another, private equity folks will not forget. As the industry continues to cement its increasingly prominent position in global corporate finance, rest assured there will be others.