Catastrophic implosion in merger and buyout bubble forcing private-equity firms and their banks to forsake deals
Sam Adelton
Sep. 22, 2007

Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc. abandoned their $8 billion takeover of Harman International. It is the first sign of crumbling merger and bubble mania that swept across Wall Street for many years.

They say, “Material adverse change in Harman's business has occurred.” In reality, the buyers just cannot afford to lose more. Harman, which said in the statement it disagreed with the buyers'' assessment, didn''t describe KKR and Goldman's specific reasons for scuttling the deal.

A July decline in demand for high-yield debt and the prospect of a slowing U.S. economy have led private-equity firms and their banks to forsake deals or renegotiate terms more palatable to investors.

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