Carlyle leads Q1 with 10 deals

In the world of buyouts, 2006 is shaping up to look a lot like the record-breaking year we just came out of. The first quarter saw U.S.-based private equity firms complete at least 225 control-stake transactions for a disclosed total of about $42 billion. Those figures are nearly identical to the first quarter of 2005, when buyout pros closed 221 acquisitions for a disclosed $40 billion, according to data compiled by Buyouts, a sister publication to PE Week.

“It’s easy to compare this deal environment to the late 90s, but today it seems like people are exercising greater self control,” says Audax Group Managing Director Jay Jester. “Today, there are a few extremely aggressive players who could be viewed as being irrational in the way that they come into the market, but you saw a lot more of them in the last go round.”

But aggression seems to be par for the course in today’s private equity arena. Take The Carlyle Group, for example, which was active in closing 10 buyout deals in the last three months, and The Riverside Co., which has already chalked up six buyouts this year. Other firms that hit the ground running in Q1 include Golden Gate Capital and Sun Capital Partners (five deals apiece), and Apax Partners, Audax Group, Francisco Partners and Kohlberg Kravis Roberts & Co. (four deals each).

In terms of deal size, KKR, Five Mile Capital Partners and Goldman Sachs Capital Partners take the cake with the $9 billion carve-out of GMAC’s commercial mortgage division.

That deal is followed by Blackstone Group’s $3.4 billion acquisition of hotel group La Quinta Corp., and the $2.5 billion acquisition of financial services company Linsco/Private Ledger by Hellman & Friedman and Texas Pacific Group.

As has been the case for the past two years, buyout pros are mostly optimistic about the year to come, and they have reason to be. U.S.-based private equity firms have already agreed to more than $115 billion worth of transactions slated to close sometime this year.

“I actually wonder if some people are not hoping for a downturn, rather than just prognosticating one,” says Tim DeVries, a managing general partner at Norwest Equity Partners. “High multiples are driving the market, and all of us would like to see prices abate a bit. But I don’t see anything changing any time soon.”