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Private Equity Giants Are Still Haunted By Pre-Crisis Buyouts


Large buyouts just before the 2008 financial crisis are still weighing heavy on the biggest players in private equity, as firms see buyouts go under and profits tumble.

KKR bought out payment processing firm First Data in 2007, which saw shares tumble 19% in Q1, reducing KKR’s net income by about $300M, for an overall $553M loss on the quarter. 

Other PERE giants are feeling the same sting. Caesar’s Entertainment (bought by Apollo and TPG in 2008) put its largest unit in Chapter 11 last year, while iHeartMedia (bought by Bain Capital and Thomas H. Lee in 2006) is feuding with creditors in an effort to get back in the black.

These PERE firms seek to buy out companies, put them in working order and sell after a few years—but these decade-long holdings show the difficulty with their buyouts just before a looming financial crisis, the Wall Street Journal reports.

Topping it off, Blackstone Group—the PERE heavyweight championlost billions in market value over Q1, after seeing a 70% profit slash in Q4. And we all remember the firm’s massive $39B buyout of Sam Zell’s Equity Office just before the crash. [WSJ]