Northrop Grumman sells TASC unit to private equity funds KKR and General Atlantic. From a government contracting perspective this is interesting because it is the first deal that is an indication of large defense companies actually selling assets to comply with new regulation not allowing contractors to provide consulting services to the government while also trying to sell it products.
From a private equity standpoint, even though it is only a billion dollar deal it took three banks to provide the leverage. The good thing is that financial sponsors are once again starting to make large investments.Thoma Bravo sold Datatel to Hellman and Friedman for approximately $570 million yielding a 4x return. Even in this down market strategic investments from financial sponsors can continue to yield impressive returns.
Another thing to note is the sponsor to sponsor activity--generally a positive meaning that even at a relatively high valuation pe funds are willing to pay up for a quality business.
Nick Deflorian, Group 2
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I believe that for the most part private equity firms do more harm than good. Excessive leverage which is often employed when a private equity firm does a deal. Very often the result is many more jobs are destroyed than created in the process.
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