Richard Bressler of Thomas H. Lee Partners spoke at 2007 Market Trends in Media about where the buyout industry is headed and why so many of the current opportunities are in the media industry. Thomas H. Lee Partners is one of the largest buyout firms in the country. It has a $9 billion fund that it just finished raising. Prior to that, it had a $6.1 billion fund, which was the largest fund in the world four years ago.
Bressler said you can tell the buyout private-equity industry has been robust because about a third of the articles in the New York Times every day are about this industry. 2006 saw $11 billion in private equity deals, which was the same total from 2001 to 2005 combined. Bressler said he expects the deals in 2007 to be even larger than 2006.
The average size of the top-20 buyout firms in the world in 2006 was $8.6 billion, and the compounded growth of the top-20 deals in the industry is 41 percent, an average of $17.3 billion. This indicated that there are more deals available that there is money to make them. In the past year, T.H. Lee did a deal with Nielsen Media for $11 billion. About six months after this they announced a transaction with Univision for $14 billion. A deal they are currently trying to complete is with Clear Channel, which is a $28 billion transaction. If this is completed, it will be the largest media deal to date. Bressler said it is important to note not only the size of these deals, but also the pace of change in the industry.
There are a number of reasons why these massive deals are being done, Bressler said. It is in part due to the quality of the companies that have made themselves available to private equity. It is also the opportunity for private equity to serve as a viable alternative to boards. Bressler said corporations are focused on transparency and keeping their companies simple, so if something doesn't fit into how they define a simplistic model, private equity can help fill in the gaps.
He concluded by saying private equity, which is only a 20 to 25-year-old industry, is here to stay for the long term. "We're in the infancy stage. The deals will get bigger. Again, there will still be too many deals chasing too little money, and larger deals do not mean low return, which is why this pace will continue."