Where Are They Now? Top Deals of the Decade

While news reports are calling the “00s” anything from a lost decade to one to skip, to one without authority to just plain sucky.

For private equity, the aughts could not have been more exciting (that is, until around mid-2007). The industry ballooned in the face of low interest rates and lax lending, leading to record breaking dealmaking that won’t be matched for a very long time. Globally, the top ten buyout deals of all time occurred between 2006 and 2008. When they were struck, the buyout barons behind them were on top of the world (or, Masters of the Universe, if you prefer).

But of course, when the good times ended, private equity was not immune. The last two years have been a wake-up call for private equity, with writedowns and stalled fundraisings to prove it. Here’s a rundown of the ten largest deals of all time–which all occurred in this decade–and how they’ve fared in the interim.

[slide title=”1. TXU”]
Sponsored by KKR, TPG, Goldman Sachs, Morgan Stanley, Citigroup, Lehman Brothers
$44 billion

Since completing the largest take-private in the history of private equity, TXU, now Energy Future Holdings, has been written down so much that the firm has netted a portion of the loss against its gain on the IPO of Dollar General. Earlier this year the company struggled to drum up participation for proposed $12.15 billion debt swap on its $43 billion in debt. After extending the deadline and lowering its target, only $357 million trading. After the swap S&P assigned the company a ‘B-’ corporate credit rating The outlook on these corporate credit ratings is negative, reflecting weak financials and increasing refinance risk.

Looks: Not so good

[slide title=”2. Equity Office”]

Sponsored by Blackstone Group
$37 billion
Since completing its 2007 buyout of the real estate behemoth, Blackstone Group has watched its largest deal turn into a sinkhole. As of February 2009, the company’s value had plummeted at least 20%, but those who purchased property from Blackstone after the deal closed fared even worse. “Many of the 16 companies that bought Equity Office buildings are now stuck with punishing debt, properties whose values are plummeting and millions of feet of office space they cannot fill,” the NY Times reported.

Looks: Not great.

[slide title=”3. HCA”]

Sponsored by KKR, Merrill Lynch Global Private Equity
$32 billion

The company offered $1.25 billion of senior secured notes in order to pay down term loans, in July. Performance-wise, HCA was being held at 1.2 times cost as of August, which is an improvement from prior quarters. It’s been performing so well, in fact, that it’s been named over and over as one of the most promising IPO candidates for 2010.

Looks: Strong

[slide title=”4. BAA PlC”]
Consortium led by Ferrocial
$30 billion

The company in November refinanced its bridge loan, clearing up a situation which an Acquisitions Monthly source called “quite bleak”. Still, maturities loom as soon as March 2010.

Looks: Ok for now.

[slide title=”5. Kinder Morgan “]
Sponsored by GS Capital and Carlyle/Riverstone
$27 billion
Buyouts magazine recently estimated the company had a modest median long term debt-to-LTM EBITDA of 5.0, which indicates the company isn’t under pressure to refinance its debt. From the outset, the company had strong performance, posting a 25.3 percent gain in revenue one year after it was taken private. Recent performance numbers were not available.

Looks: Stable

[slide title=”6. Harrah’s”]
Sponsored by TPG and Apollo
$27 billion

The deal earned itself on Time Magazine’s top ten worst deals of 2008 list, after the firms wrote down their holdings in the company by 20% to 25%, meanwhile co-investors had written down their investments by 75%, and the company’s debt was trading at next to nothing. Yet the company seems to have turned things around (or at least stemmed the tide) a bit this year, issuing a new $1 billion note to retire a portion of Harrah’s existing term loan and revolving credit indebtedness, and in December bondholders exchanged $4 billion of the company’s bonds for new debt with later maturities. That offering was oversubscribed.

Looks: Better than expected

[slide title=”7. Alltel“]
Sponsored by TPG and GS Capital Partners
$27 billion

Alltel is the only All Time Top Ten mega-deal to have achieved an exit. The company sold to Verizon for $28 billion in just over a year after it purchased the company, closing the deal in January 2009. The firms earned a 28% return.

Looks: Smart and/or lucky

[slide title=”8. First Data”]
Sponsored by KKR
$27 billion
will benefit from a listing before 2011, when KKR’s PIK notes convert to cash pay.

The company has been named as an IPO candidate.

Looks: Not Bad

[slide title=”9. Hilton”]
Sponsored by Blackstone Group
$26 billion


Proposed debt for equity swap on $5 billion of $20.6 billion in debt.

[slide title=”10. Clear Channel”]
Sponsored by THL Partners and Bain
$25 billion

This fall the New York Post reported that the company was struggling to arrange a debt swap, sparking bankruptcy rumours. The firms later denied that. The company today issued $2.5 billion in new debt.

Looks: Not Great

View the rest of our year-end coverage here. 00s images via New York magazine.