Deal Flow Surges Forward With Q4 Splash –

After what felt like an extended slumber, the buyout community finally came out of hibernation in the second half of 2002, as a $19 billion fourth quarter vaulted total deal volume for the year to $42 billion-almost double the amount in 2001.

Several trends helped propel last year’s activity, but the primary driver was corporate divestitures. Saddled with sagging stock prices, many corporations sold off parts of their businesses. Though restrictive lending terms forced LBO firms to cough up more equity to get deals done, the chance to buy at bargain prices-and with little or no competition from strategic buyers-often proved too tempting to pass up.

“Private equity has picked up substantial share, as competition from outside sources has fallen off,” said Jim Coulter, founding partner of Texas Pacific Group. “The strategics have gone from net buyers to net sellers, while the IPO market has pulled back considerably.”

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