Wall Street Is Dealing Like It’s 2007

Wall Street Is Dealing Like It’s 2007

Never mind the return to normal, Wall Street's private equity shops are staging a return to abnormal. Leveraged buyouts are happening at a speed and extravagance that had been unique to 2006 and 2007, the run-up to the financial crisis.

Private equity firms have already made $470 billion of acquisitions this year, including Blackstone Group Inc.'s deal announced Monday to take data-center operator QTS Realty Trust Inc. private for $10 billion. If that headline didn't transport you back 14 years, this one from Saturday almost certainly will: Blackstone has separately teamed up with Carlyle Group Inc. and Hellman & Friedman on a $34 billion LBO of medical supplier Medline Industries Inc. (all prices include debt). At this rate, the value of private equity purchases in 2021 will surpass the total for all of 2020 in just a few weeks, according to data compiled by Bloomberg. This year might even break the 2007 record.

The buyout frenzy is just one more anomaly of the Covid-19 crisis. Markets, housing demand and prices of goods have all soared in the face of a deadly virus that had ground the global economy to a halt. Activity is pumping along largely because of low interest rates, fiscal