Private Equity: Episode 15 – History of PE: The 2000s

The late 1990s paved the way for Private Equity, marking the beginning of a new period that was extremely favorable to the sector starting from 2000. The economic and regulatory conditions were ideal, and a vast number of operations were conducted, facilitated by declining interest rates that enabled significant leverage effects (see Episode 13).

In the United States, major operations included the 2005 buyout of Hertz, owned by Ford, by the consortium Clayton Dubilier and Rice, The Carlyle Group, and Merrill Lynch Global Private Equity for €12 billion, as well as the acquisition of Metro-Goldwyn-Mayer also in 2005.

The pace of deals was so intense that, in 2006, 654 transactions were recorded, totaling $375 billion—an all-time record, representing 18 times the volumes of 2003. The peak of this period came in 2007, with global investment volume reaching $686 billion. The United States accounted for 71% of transactions, while Europe and the Asia-Pacific region each represented about 15%.

In France, Private Equity gained significant momentum at the turn of the 2000s with increasingly spectacular deals. The burst of the internet bubble led investors to shift away from Venture Capital and focus more on LBOs.

In 2002, Wendel and KKR acquired the Legrand group from Schneider Electric for €4.9 billion. The alliance between Eurazeo, Clayton Dubilier & Rice, and Merrill Lynch PE bought Rexel for €3.7 billion in 2004.

A key event in 2006 came when KKR and Goldman Sachs PE acquired PagesJaunes for €6.1 billion, employing an unparalleled LBO leverage effect, where debt represented more than 80% of the transaction.

In 2007, the collapse of Lehman Brothers brought an abrupt halt to these record operations. The ensuing financial crisis would deeply affect the sector, notably with the sharp reduction in credit availability.

Private Equity entered a period of transformation, where new players emerged, and new global spheres of influence developed, particularly in Asia and China.

Once successive crises were absorbed, the dawn of the 2010s marked a powerful rebound for the sector.