In the investment world, these most successful private equity firms in the world are among the biggest movers and shakers.
Private equity firms have been around for a long time. It could be argued that the first leveraged buyout was performed by J.P. Morgan when he bought Carnegie Steel in 1901, but the first private equity firms as we know them today came later. In 1946, two such firms opened, American Research and Development Corporation and J.H. Whitney & Company. There were few notable buyouts since then, like the acquisition of Pan-Atlantic Steamship Company by McLean Industries, Inc. It was Warren Buffet and Victor Posner who made the new way of acquisition (by using the holding companies to purchase corporate shares) in the 1960s.
The private equity boom came in the 1980s. Many of the most successful private equity firms made their name during that time, although some became quite notorious, like George Icahn and his TWA deal. The fact that there are lawsuits even today goes to show how messed up the whole arrangement was. The corporate raiders during that time have made fortunes of buying out companies and stripping them of all assets. The comparison to vultures has been mentioned many times, for obvious reasons.
In 2003, what is commonly referred to as the Golden Age of Private Equity begun. Some of the Most Successful LBOs and Private Equity Buyouts in History have been made during the 2003 – 2007 period, before the bottom fell off the market in 2008. Almost all of the private equity firms on our list have made huge investments in that period, but not all of them were successful. In fact, a good number of them were total busts, like the second biggest LBO deal in history, the acquisition of TXU by Goldman Sachs, KKR, and TPG Capital. Ever since, the leveraged buyout market has been in a slump, although the Dell deal from 2013 was a sign of recovery. That the future of private equity forms can be bright shows the fact that in latest PEI 300, some 20% of companies are new entries.
PEI 300, which we used as our source, is a publication of Private Equity International. The list is based on how much funds have private equity firms raised in the last five years and is an excellent metric for determining the successfulness of a firm. The 2017 PEI 300 can be seen here.
Private equity is predominantly an American game, so much so that out of 10 most successful private equity firms in the world 9 are based in the United States (five of them in New York). Even the one that isn’t from the United States has deep American roots.