Dueling Fools: Private Equity Buyouts

Private equity shops like Blackstone and Kohlberg Kravis Roberts are flush with cash and hungry to put that money to work. We've already seen big deals with Harrah's (NYSE: HET), Sallie Mae (NYSE: SLM), and TXU, and there are no signs of slowing down.

The bankers and lawyers will no doubt make a killing from these deals, but the question remains: What do private equity buyouts mean for the average investor?

On the surface, investors at First Data (NYSE: FDC) and Bausch & Lomb (NYSE: BOL) should be happy that private equity is picking up their shares for a nice premium. But there may be danger festering in the cozy relationships between management and bankers, and with billions of dollars at stake, what happens to Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), or Citigroup (NYSE: C) if one of these deals goes bad?

I posed these questions to our Foolish analysts. Matt Koppenheffer felt that buyouts were good for investors, while Tom Taulli took a bearish stance on PE buyouts.

Duel on, Fools!

• Read the bull argument
• Read the bear argument
• Read the bullish rebuttal
• Read the bearish rebuttal
• Vote for the winner

Financial services editor Joey Khattab does not own any of the shares mentioned. Bank of America is an Income Investor recommendation and First Data is an Inside Value pick. The Fool has a disclosure policy.