Will There Be a 100 billion USD Private Equity Buyout

 

In the last private equity boom between 2003 - 2008, there was talk and expectations of a 100 billion USD private equity buyout.

This never materialized.

In the current private equity boom there are again prerequisites for a 100 billion USD private equity buyout.

Private equity firms manage 4.4 trillion USDs globally. Blackstone, the biggest alternative asset manager for example manages 1.1 trillion USD in alternative assets.

For a 100 billion USD private equity to happen many things have to come in place. Several private equity managers have to unite, because the individual funds they manage are not big enough, the largest private equity fund is CVC's 23 billion USD in raised capital. In addition a net cash flow positive company with good growth prospects from an established industry like energy, materials, industrials, consumer staples,  etc. has to be on offer. The particular company should also be able to tolerate high debt levels, which are the way private equity firms create leverage in private equity buyouts.

A 100 billion USD private equity buyout has around 70 % chance of happening in the current private markets boom, according to Wolfteam Ltd.'s projections and estimates.

An interesting candidate would be a large capitalization technology company. However, private equity firms are risk averse in investing in large capitalization technology companies due to the ever changing and dynamic nature of technology. There is always the chance that a new technological wave or nimble competitor could erode the business of even large capitalization, established technology companies. and since private equity alternative investment companies manage money for pension funds, university endowments, insurance companies and other institutions the prospects of a 100 billion USD technology investment loosing large part of its value relatively fast is not an appealing prospect.

The private markets boom, however is in full swing and alternative asset managers could and are making large capitalization investments.