Simpson Thacher & Bartlett just had the kind of summer that private equity lawyers dream about. The New York firm’s two top private equity clients, Kohlberg Kravis Roberts & Co. and The Blackstone Group, were on a dealmaking binge, and Simpson was at the center of the action.
The deal that caught everyone’s attention was the $33 billion leveraged buyout of hospital operator HCA Inc., announced at the end of July. It would finally break the record of RJR Nabisco Inc.’s $31 billion buyout in 1989. And Simpson, which advised KKR on RJR 17 years before, had the coveted role of representing the private equity consortium.
But that’s just the beginning. The New York-based firm worked on KKR’s multibillion-dollar purchases of stakes in Royal Philips Electronics N.V.’s semiconductor unit and France Telecom’s yellow-pages publisher, both announced within ten days of HCA. And it advised Blackstone on a triple-header in June: the $8.9 billion buyout of Trizec Properties, Inc., and Trizec Canada Inc., the $4.3 billion purchase of Travelport Inc., and the $870 million acquisition of Encore Medical Corporation.
Of course, it’s been a good year for many in private equity. Leveraged buyouts totaling $209 billion were announced in the first eight months of 2006, accounting for 24 percent of all merger activity, according to Thomson Financial. Ten of the largest 15 buyouts ever, including the $21.7 billion deal for pipeline operator Kinder Morgan, Inc., and the $17.4 billion buyout of retailer Albertsons LLC, have been announced this year.
And marquee funds continue to attract billions of dollars from investors. Blackstone, for example, raised $15.6 billion for its latest global fund earlier this year. The tidal wave of activity has been beneficial for just about anyone who calls himself a private equity lawyer.