The bubble in private equity buyouts is right here – the $48.5 billion buyout deal Canadian telecommunications operator BCE shows it all
Pamela Jones
Jul. 1, 2007

Every bubble rises to a climax followed by a nasty burst resulting into deep anticlimax. This one is no different. BCE said it agreed to be acquired by the investment arm of Ontario Teachers'' Pension Plan, Providence Equity Partners Inc., and Madison Dearborn Partners for $32.6 billion. The deal also includes an additional $15.9 billion in debt, preferred equity and minority interests, for a buyout package valued at an overall $48.5 billion.

Investment arm of Ontario Teachers'' Pension Plan did what small private equity groups started doing at the end of 1999 – buy large shares of corporations. This is somewhat different because BCE is a national telecom companies burdened by debt and competition from start-ups. What will make BCE really profitable after the deal? When you do not find the answer, you know the bubble is here. It is just a question of time when the bubble bursts.

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