Why debt costs could burst private equity bubble

Private equity deals are all over the frontpages. When investments make the headlines, it usually means they're in a bubble. So what's the greatest threat to M&A?

When investments constantly hit the headlines, it's often a sign that a bubble is about to burst. So the fact that private equity is all over the front pages suggests that the only way from here is down.

Enormous amounts of money are sloshing around the industry. Private equity buyouts account for one in three of all business purchases, and, sales-wise, they account for many more, says Heather Connon in The Observer. The top five investment houses have a £38bn war chest that has to be spent by 2010 and sums like that mean almost any target even the likes of Vodafone, BT, Unilever and M&S could be in play.

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