Private Equity Buyout Activity Accelerates

The Leonard Green & Partners-led acquisition of a 60% stake in Topgolf was a corporate carve-out that valued the business at approximately $1.1 billion. For parent company Topgolf Callaway Brands, the deal provided around $770 million in net proceeds, enabling debt reduction and share repurchases while retaining a 40% upside in Topgolf's future growth. This transaction effectively unwinds the 2020 merger which originally valued Topgolf at a higher $2 billion, reflecting a valuation reset amidst rising construction costs and a post-pandemic normalization in the golf boom. Clayton, Dubilier & Rice's $6.2 billion LBO of Sealed Air was financed with a substantial debt package of approximately $7.9 billion, including around $4.5 billion in leveraged loans and junk bonds with anticipated yields of 7.0-7.25%. From the sponsor's perspective, the deal is a bet on operational improvement in a company that had seen C-suite turnover and soft demand but was showing signs of recovery. For sell-side advisor Evercore, the key was delivering a 41% premium to Sealed Air's unaffected stock price for shareholders. In the defense sector, J.F. Lehman & Company's acquisition of Forged Solutions Group highlights a focus on highly specialized, critical suppliers. FSG produces complex forgings for aerospace and defense, a sector seeing increased M&A activity due to rising defense budgets and the need for next-generation technology. The sponsor's thesis is built on capitalizing on a capacity-constrained segment of the supply chain to meet growing long-term demand for flight-critical components. For TMT interview prep, analyze Thoma Bravo's $12.3 billion take-private of Dayforce. The deal was valued at a premium 22x EV/EBITDA and 6.6x EV/Revenue. Thoma Bravo's value creation plan focuses on accelerating Dayforce's AI-driven platform and optimizing its cost structure, a common PE playbook for software assets. The acquisition was funded with a $6 billion debt package from Goldman Sachs, showcasing a typical LBO financing structure for a large-cap software buyout. In Financial Institutions Group (FIG) M&A, traditional EV/EBITDA multiples are irrelevant for banks due to their unique balance sheets where debt is an operational component. Instead, valuation focuses on equity-based metrics. For a case study, examine PNC's $11.6 billion acquisition of BBVA USA, which was valued at 1.3x Tangible Common Equity and a Price/Tangible Book Value (P/TBV) of 134%. The strategic rationale for PNC was national expansion and significant cost synergies, projecting 21% earnings accretion by 2022. When discussing deals in a Financial Sponsors Group interview, frame your analysis around the "LBO levers" of value creation: deleveraging, EBITDA growth, and multiple expansion. Start with the entry valuation and sources & uses of funds. Then, project free cash flow available for debt paydown (deleveraging). Finally, detail the exit strategy, including assumptions on exit multiple and the resulting IRR and MOIC for the sponsor. To stand out when recruiting for Financial Sponsors groups, go beyond reciting deal stats. Articulate a clear investment thesis, discuss potential operational improvements, and analyze the capital structure. For example, mention how a sponsor might improve margins through cost optimization or accelerate growth via a "buy-and-build" add-on acquisition strategy. Demonstrating you think like an investor, not just a banker, is the key differentiator. Carve-out transactions are a major theme, expected to drive M&A in 2026 as corporations shed non-core assets. For sponsors, these deals offer advantages like reduced competition and significant operational upside. The challenge, and where PE firms create value, is in executing the complex separation from the parent company, building a standalone infrastructure, and retaining key talent through the transition.