Private equity is about continuous dealmaking. But, with the wrenching credit crunch, activity has been horrible.

So, what to do? Interestingly enough, it looks like some of the top private equity operators are signing up for board duties.

Look at GM, which this week announced five new members to its board. In fact, three of them are from major private equity firms: The Carlyle Group's Daniel Akerson, S. J. Girsky & Co.'s Stephen Girsky and TPG's David Bonderman.

What's going on here? True, private equity has taken quite a few lumps over the past couple years. For example, Bonderman lost a bundle on his Washington Mutual transaction (which was one of the worst private equity deals in history).

This week, some of the top veterans in private equity -- TPG's David Bonderman, Carlyle's David Rubenstein, and KKR's George Roberts -- got together at a conference in Hong Kong. And, all in all, it was fairly depressing (hey, I guess that's what happens when you lose billions and billions of dollars).

Take Bonderman. He thinks the downturn will be protracted, calling it an L-shaped recession (the more common description is a V-shaped recession, which means there is a strong snapback). In fact, he thinks U.S. unemployment will hit 10% or so.

Then again, keep in mind that Bonderman lost about $1.3 billion on his six month investment in Washington Mutual.

Despite all this, Bonderman still has an appetite for investments. For example, he's focusing on the debt securities from hedge funds. Because of massive redemptions, the prices are at distressed levels.

Rubenstein also gave a grim presentation (he thinks the downturn can last several years). But, he is still bullish on some opportunities, especially in Asia. For example, he thinks China offers some compelling valuations and that the country may become more open to outside investments.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Even for the tier-1 private equity operators, a $1.3 billion loss is a big deal – especially when in comes in about five months. This is what happened today with TPG, which was a major investor in Washington Mutual (NYSE: WM). Of course, the bank's shares were virtually wiped out today because of a federal intervention that resulted in JP Morgan Chase & Co. (NYSE: JPM) owning the assets.

Interestingly enough, TPG has a long history with distressed investing. In fact, the company's founder, David Bonderman, made a fortune from the S&L crisis during the early 1990s.

But no doubt, today's environment is without any precedent. No one seems to have any clue about what's happening – which can make investing a dicey game.

True, distressed investing can result in hefty returns. It's important to keep in mind that the risks are substantial. Although, it sill looks like a variety of private equity firms still have an appetite for these plays, such as Fortress Investment Group LLC (NYSE: FIG).

However, the big beneficiaries may not necessarily be private equity firms. Even the recent loosening of regulations, private equity firms are likely only to make minority investments in banks.

Instead, it may be the major banks – such as JP Morgan – that will clean-up on the mess on Wall Street. They have strong balance sheets and tremendous asset bases to make such deals payoff.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Back in the 1990s, Washington Mutual, Inc. (NYSE: WM) was a big home run for the founder of TPG, David Bonderman. So, when he structured a $7 billion capital raise for the company in April, it seemed like a sign that the smart money had some keen insight, right?

However, in today's wacky market, nothing seems to work out. For example, TPG's investment price was $8.75 per share. Keep in mind that this was a 33% discount to the current market price (there were also warrants to purchase 57.1 million more shares at $10.06 each).

What's more, TPG was savvy enough to negotiate a juicy anti-dilution clause; that is, if Wamu's stock price fell, the fund would get more shares.

The problem: with the plunge in Wamu's stock (to $2.12 per share), there will be a deluge of more shares to hit the market.

Well, according to a piece in the NY Times, it looks like TPG is going to forgo the antidilution clause (assuming the company needs to raise more capital, which seems like a good bet). Unfortunately, this is yet another sign of the rapid deterioration of the financial sector – and how the so-called "smart money" can get things very wrong.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Back in the 1980s, David Bonderman was the chief dealmaker for Robert Bass, a Texan billionaire. He helped to structure the $550 million buyout of American Savings and Loan Association of California, which was caught in the S&L morass. It was a complex deal, requiring lots of negotiations with federal regulators. But it ultimately turned out to be a great investment. In fact, the bank became a vehicle to finance other deals.

Well, Bonderman is coming back to the future. Now, as the chief of TPG, he's one of the top players in private equity. And he wants to do some finance deals. To this end, he's raising $7 billion for a financial service fund. The investments will range from minority stakes to control situations.

Actually, Bonderman has already been busy with bank deals. For example, he recently assembled the $7 billion equity infusion for Washington Mutual (NYSE: WM). He also approached Merrill Lynch (NYSE: MER) to do an investment, which, so far, hasn't gone anywhere.

Yet, there are many financial institutions that need cash. Moreover, having TPG as a partner is usually a good thing.

As should be no surprise, it looks like TPG is getting traction on the capital raise, with commitments from the New Jersey State Investment Council and even the government of Singapore.

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.

David Bonderman, a founding partner of TPG Capital (formerly the Texas Pacific Group), recently stated that he has no immediate plans to take his firm public. However, he did indicate that virtually all of the major private equity firms will probably be public companies within five years. If that's the case, he hopes TPG will be one of the last to go that route.

"Being public is not my favorite thing," Bonderman said in an interview with Reuters. Indeed, it is odd that aggressive investors who profit largely by taking public companies private would want to go public. Bonderman said that is a "delicious irony" that the Blackstone Group (NYSE: BX), among others, went public even as it continued taking other firms private.

So why do private equity firms go public? The answer is simple: it's where the money is. Going public allows investment firms to gain access to massive -- and liquid -- capital markets. Of course, it also provides GDP-sized payout to the principals. But as Blackstone has shown, it doesn't necessarily mean that the firms suddenly have to become more transparent. As Malon Wilkus, the CEO of American Capital Strategies, states in this interview with The Wall Street Journal, "The management company doesn't have to provide much transparency about the individual investments at all. They probably don't have to give details on the returns of the funds." And if the reporting requirements that come with being publicly traded companies prove to be too onerous, the firms can always profit by doing what they do best: they can take themselves private once again.

Ok, if you bought shares of The Blackstone Group LP (NYSE: BX) for $38, you probably don't like the firm's leader, Stephen Schwarzman. Or, if you pay ordinary tax rates, you probably have some distaste for the man. Oh, what if you got a pink slip from a company that The Blackstone Group purchased?

I think it's a good bet that Schwarzman's popularity rating is dicey.

Yet, in the deal world, he should be in the Hall of Fame. In fact, in this Sunday's NY Times, Andrew Ross Sorkin has a piece that defends the controversial financier.

According to Sorkin, he thinks it was inevitable that we would learn about the shadowy world of private equity. So why not now?

What's more, Sorkin says that Schwarzman is not the only dealmaker who likes to spend money on luxury and parties. For example, he points to TPG's David Bonderman, who hired the Rolling Stones for his birthday bash.

Of course, Schwarzman was smart enough to realize that there was a big opportunity to take lots of money off the table – and, as a result, make it more difficult for his competitors to do the same.

More importantly, Schwarzman has assembled a top-notch team and racked up stellar returns.

Basically, he is no different from any other top financier, which is probably why he has lots and lots of detractors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Texas Pacific Group's (TPG) David Bonderman and KKR's Henry Kravis got a civic lesson yesterday. These buyout wizards met with the Texas House Committee on Regulated Industries on the issue of TXU (NYSE:TXU). Four proposed board members of TXU were there too: Don Evans, former U.S. Secretary of Commerce; James Huffines, Chairman of Plains National Bank Central Region; Ambassador Lyndon Olson, a former member of the Texas Legislature; and William Reilly, former Administrator of the U.S. Environmental Protection Agency.

The message: don't pass legislation that would require a regulatory review of the mega deal.

Hey, but don't politicians like to intervene -- especially when it concerns what consumers may ultimately pay?

Definitely. And it does look like the legislation is getting traction.

This does not mean the deal is doomed. Basically, it looks like TPG and KKR will need to make even more concessions, such as selling off assets and not piling debt on the regulated business units. TXU will also need to report its quarterly filings to the SEC.

The big problem is that the legislation will probably delay the process even more. And that's why TXU's stock has been lagging.

While the buyout offer is $69.25, TXU's stock is currently trading at $63.90.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

David Bonderman, the top man at private equity firm Texas Pacific Group, is pitching the idea of not proceeding with the construction of eight coal-fired power plants as part of his bid for TXU Corp (NYSE: TXU). Bonderman supposedly made the offer to appease environmental activists and hold off one potential obstacle to closing the deal.

However, is this Bonderman's environmental soft side or is it about making more money? By not proceeding with eight power plants, that is a lot of future supply of power that will not be available to the marketplace. Believe it or not, power consumption is a pretty good growth business, growing about 6% to 8%, if memory serves me correctly.

Bonderman has a long history of participating in environmental causes, serving on boards of the Grand Canyon Trust and the Wild Life Fund. However, one must question what will happen to power prices when a huge future supply of power is eliminated. It most likely means big green profits for Bonderman and Texas Pacific.

David Bonderman, a founding partner at the Texas Pacific Group, gave a speech at the Super Return 2007 conference today. Held in Germany, the get-together is a big-time event for the private equity crowd. Yes, all the big players are there.

But, wait, isn't Bonderman in the midst of the biggest deal ever; that is, the buyout of TXU (NYSE: TXU)?

That's true. Then again, the "show must go on." Besides, Bonderman has a strong team and I'm sure he's got the latest wireless gadgets to maintain contact.

OK, so what's his view on the TXU deal?

Well, he's usually outspoken, but he is keeping mum about TXU.

However, it should be no surprise that he thinks private equity is a good thing. It helps streamline businesses. It provides returns to investors. And, by the way, it's extremely lucrative for guys like Bonderman.

He also said – that despite all the media coverage – private equity is still a small part of the financial system. He called it a mere "rounding error."

So, he expects a lot more growth. And, the growth should spill-over into foreign markets.

You can get more on the topic from an article in Reuters.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Well, it looks like the UK's Financial Services Authority is not a fan of private equity. The government agency is concerned that a mega deal will inevitably implode – leaving governments with the tab. Another concern: private equity transactions often lead to layoffs.

As a result, expect more scrutiny from the UK.

This is certainly big news for US private equity players. After all, it is getting tougher to find good deals here. So, why not move overseas? In fact, Europe is certainly ripe for restructuring.

But David Bonderman, who heads the Texas Pacific Group, is not happy about the UK's stance. While he admits there could be problems – it is still not inevitable. He also complained that private equity is being "demonized."

OK, maybe it is. But, Mr. Bonderman is making huge amounts of money from his deals. So, can't he take some criticism? Might it be possible that private equity firms are doing bad deals?

Actually, as private equity firms grow in size, there is a need to get more politically savvy – especially in light of the Dems sweep of the Congress. There is also an investigation – by the Justice Department – of possible antitrust violations of private equity firms.

No doubt, Bonderman is brilliant when it comes to structuring deals. But he definitely needs to get some better coaching when it comes to dealing with US and foreign governments.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Financial Statements.

I was at the annual conference for the Council of Entrepreneurial Development this week (in North Carolina). One of the speakers was David Bonderman, the founder of the Texas Pacific Group (TPG), a legendary private equity firm.

Currently, TPG has more than $30 billion under management and has a portfolio of companies that control about $65 billion in revenues (with 550,000 employees). Some of the companies include J. Crew, Burger King and Seagate Technology.

As usual, he was not afraid to speak his mind. For example, he said he would rather "slit his throat" than be a venture capitalist.

He also had some interesting things to say about the future of private equity (PE). In other words, what will this world look like in ten years?

According to him:

The spoils go to the mega firms: The top ten PE firms control much of the money. Then again, they command the highest returns (Bonderman said the returns were about 37% annually for the past five years).