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Leveraged buy-outs spur M&A

Private equity is driving the M&A market, with leveraged buy-outs (LBOs) in the first six months of the year at their highest level since 1998.

Figures from Standard & Poor?s report that over $37 billion of deals closed between January and June 2004, with US deals accounting for the majority of the transactions.

And this trend is set to continue for the rest of year. According to CF?s M&A Review, half of all the US deals closed in July involved private equity sponsors.

The LBO market is being driven by rising confidence in the US and investor appetite for leveraged loans. Not only do these loans give investors somewhere to invest outside the poorly-performing bond market, they also have floating interest rates, a good hedge for investors in a time of rising rates.

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