The failure of Energy Future Holdings Corp., known as TXU Corp. when KKR & Co., TPG Capital and Goldman Sachs Capital Partners acquired it for $48 billion in 2007, and the stumbles of other huge deals of the past decade have reshaped how major buyout firms go about their trade.
The Dallas-based utility's bankruptcy yesterday ended the biggest leveraged buyout on record and will wipe out most of the $8.3 billion of equity that investors led by three of the world's largest private-equity firms sank into the company.
"Energy Future is emblematic of the peak of the buyout boom, when firms did very high-priced, over-leveraged deals that left little room for error," said Steven Kaplan, professor at the University of Chicago Booth School of Business. "When you buy into a cyclical industry at the peak and you get the bet wrong, bad things happen."
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