By the Numbers

Private Equity's Role Grows Along With Local Deals

Monday, February 19, 2007

The value of mergers and acquisitions in Virginia, Maryland and the District hit record highs last year, according to data compiled by Bloomberg. But even more striking is the growth of private-equity involvement in these deals, which more than doubled in each of the three jurisdictions.

The data include all deals involving regional companies as sellers or buyers. Last year Virginia had the largest gain in the number of deals with 437, a 15 percent increase over 2005, although the cash going into the deals fell 3 percent, to $49.8 billon. Maryland held steady with 310 deals, but the value of the average deal rose, with the volume of cash growing 19 percent to $24.5 billion.

In the District, 174 deals attracted $83.9 billion, by far the highest-valued transactions in the region. The dollar total was more than three times the amount in 2005 and 25 times the 2002 figure.

That increase was largely funded by such private-equity powerhouses as Carlyle Group and Allied Capital Partners. Carlyle was an investor in the purchase of three Texas energy firms for a total of $49 billion.

"Many of the most significant players in private equity are based here, and that's created a financial community that didn't exist before," said Anita Antenucci, managing director at the investment banking firm Houlihan Lokey.

In Northern Virginia, the increase came largely from mergers of government-contracting firms, deploying money earned during the federal government's post-2001 spending spree, experts said. Also, the likelihood of a spending slowdown leads firms to diversify their offerings through acquisitions.

Technology companies have also become hot acquisition targets for the likes of IBM and AOL. Because going public has become more difficult due to heightened regulation, selling to a larger company has become a popular exit strategy for venture capitalists and entrepreneurs. "It's a great time to be a seller of a company," said Rick Rickertsen, managing partner of Pine Creek Partners, a Georgetown private-equity firm. "This is going to be another big year."

-- Kim Hart


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