Most of the largest LBO deals of all time occurred during a brief, heady explosion of such deals, fueled by easy leverage and equitised by the eager participation of institutional investors. PEI decided to perform a health check on 15 of the largest leveraged buyouts done in North America and Europe during the peak of the market (1 January 2005 to 31 December 2008 was the qualifying period).
Their (largely unrealised) performances range from thriving to floundering. But one fact stands out – despite dire warnings several months ago that all the big buyouts were toast, most of these investments are far from being dead. Many will not deliver the kinds of returns originally hoped for. Some will likely destroy equity. But at press time, while a handful of these LBOs looked sickly indeed, we found not one that had been written off as dead, equity value notwithstanding.