Leveraged finance deal of the year: Sungard Data Systems $11.3 billion LBO
The technology company’s buyout pushed back the limits of what is possible in LBOs.
|At a glance:
Deal type: $11.3 billion leveraged buyout of Sungard Data Systems by Silver Lake Capital Partners, Kohlberg Kravis Roberts, Providence Equity, Bain Capital, Blackstone Group, Texas Pacific Group, Goldman Sachs
Financial adviser: CSFB
Fairness opinion: Lazard
Financing arrangers: Deutsche Bank, Morgan Stanley, JPMorgan, Citigroup, Goldman Sachs
When the $11.3 billion leveraged buyout of Sungard Data Systems was announced in March 2005, it broke a number of records, shocking the market. At $3.5 billion, it was the largest equity cheque ever written for an LBO, the largest ever buyout of a technology company and included the largest ever consortium of sponsors. On top of that, it was the biggest buyout since the RJR Nabisco deal 16 years earlier.
Record breaker though it might be, the LBO of the financial services software company was also greeted with healthy scepticism. What were so many private equity sponsors doing clubbing together and writing such a large equity cheque in a sector where buyouts were seen as risky, not to mention that this loaded the deal up with 7.3 times debt to ebitda? And how on earth were sponsor banks going to find $8 billion to fund the debt portion?
“Twelve months ago, people thought that tech companies could not be subject to an LBO, and certainly not with 7.3