Analyst Upgrades

• Heico (HEI) to outperform from market perform at FBR Capital.
• Eaton (ETN), Silgan Holdings (SLGN), MYR Group (MYRG) and Shaw Group (SHAW) to outperform from neutral at RW Baird.
• Infosys (INFY) to buy from Neutral at Nomura.
• Isle of Capri (ISLE) to buy from neutral at Merriman.
• NovaGold (NG) to sector perform from underperform at RBC Capital.
• CarMax (KMX) and Rockwell Collins (COL) to outperform from neutral at Credit Suisse.
• DHT Holdings (DHT) to overweight from neutral at JPMorgan.
• Cabot Oil & Gas (COG) to overweight from underweight at Morgan Stanley.

Analyst Downgrades

• Diodes (DIOD) to hold from buy at Benchmark.

Analyst Initiations

• General Motors (GM) with a buy at BofA/Merrill and Citigroup, with an overweight at Barclays and Morgan Stanley, and with an outperform at Credit Suisse and RBC Capital.
• LPL Investment (LPLA) with an overweight at Morgan Stanley, a buy at Goldman, a neutral at JPMorgan, and a market perform at Keefe Bruyette.
• Booz Allen (BAH) with a market perform at Wells Fargo.
• ValueVision (VVTV) with an overweight at Piper Jaffray.

The Carlyle Group, which is a top private equity firm, got its start by making deals in the government and defense sectors (back in the 1980s). In fact, its co-founders have extensive federal government experience.

Well, the firm is going back to the future. That is, Carlyle announced a $2.54 billion purchase of Booz Allen's government consultancy (for a majority stake). Apparently, both sides have been working on the transaction since the beginning of the year.

The Booz Allen unit has roughly 18,000 employees and has mega clients, such as the NSA, Department of Homeland Security, the World Bank and the Department of Defense. Essentially, the unit had little synergy with the core business of Booz Allen, which is focused on commercial management consulting. But, of course, there should be lots of strategic value for Carlyle's portfolio of businesses.

And, the Booz Allen government unit has been a strong business, especially in light of the rise of global terrorism.

Something else: this is yet another sign that the buyout market is beginning to improve.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.