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Got Leverage?

If you're ready to sell, you've got the upper hand. Large buyout firms will be looking to entrepreneurs.

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This story appears in the September 2003 issue of Entrepreneur. Subscribe »

Banks may have been quiet over the past nine months or so, and venture capital firms mute for all intents and purposes, but another source of private equity--leveraged buyout (LBO) firms--has started making some noise. Following a strong fourth quarter last year, LBO firms were out wheeling and dealing in the first quarter of 2003, with a total of 119 buyout transactions worth more than $19 billion in disclosed values, according to Thomson Venture Economics. That's a hefty jump over last year's first-quarter tally of 45 deals worth $3 billion. Not bad, considering in 2001 and most of 2002, most mergers and acquisitions departments were playing cards to pass the time.

According to PricewaterhouseCoopers research, increased private equity activity suggests a buyout boom in the second half of 2003. Unlike many VC firms, buyout funds are still raising money and are sitting on as much as $100 billion in acquisition capital, says Bob Filek, a partner in PricewaterhouseCoopers Transaction Services group in New York City. With money to invest and only so many big companies for sale, more buyout firms will be turning an eye toward smaller companies.

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