Today the markets were supposed to be braced for a "Day of Rage" in Saudi Arabia, but that was not to be. An 8.9-magnitude quake in Japan battered Asian markets and Japan in particular. Retail sales came in up 1% rather than 1.2% but that was close enough considering the higher gas prices in the equation. All in all, today could have been far worse than what we really saw throughout the day in the U.S.

Here were today's unofficial closing bell levels:

Dow Jones 12,044.40 +59.79 (0.50%)
S&P 500 1,304.28 +9.17 (0.71%)
Nasdaq 2,715.61 +14.59 (0.54%)

Top Analyst Upgrades/Downgrades
Top Impact Movers in Japan

HCA (HCA), which is the largest hospital operator in the US, is no stranger to buyouts. It struck one in the late 1980s and another in 2006. So far, the strategy has generated huge returns for investors.

And yes, today HCA hit the public markets again. In all, the company raised $3.79 billion -- which makes it the biggest private equity IPO ever. The underwriters include Bank of America Merrill Lynch (BAC), Citigroup (C) and JPMorgan Chase (JPM).

Only a year ago, the belief was that the private equity world was doomed. But as is common in the financial markets, this was big exaggeration. If anything, private equity firms have shown that they can adapt quite well.

Just look at KKR (KKR). In its latest quarter, the company posted a profit of $180.6 million or $0.86 per share. The consensus estimate was for $0.42 per share.

But private equity firms like to point to another metric: economic net income, which focuses on fees and gains from investments. This came to $714.6 million in the quarter. Yes, the private equity game can be wildly profitable.

The market has made a nice rebound over the past few months, and one question is on every investor's lips: Can it continue?

To get an answer, it might not be a bad idea to look at what the private equity firms are planning. Remember when The Blackstone Group (NYSE: BX) decided to cash out with an IPO and it marked the exact top of the private equity boom? Take a look at how that stock has performed since then.

Well, now The Financial Times reports that "Kohlberg Kravis Roberts, the world's biggest buy-out group, is preparing up to six companies for initial public offerings worth billions of dollars, including Toys 'R Us, as it sells some of its most valuable groups back to the stock market."

There has been lots of private equity interest in the health care sector. Some of the notable deals include the buyouts of HCA and Triad.

The latest deal comes from the Texas Pacific Group (TPG). The firm has agreed to pay $945 million for the Surgery Division of HealthSouth Corp. (NYSE: HLS). The division has 139 outpatient surgery centers and three surgical hospitals across 35 states [revenues were not disclosed].

Interestingly enough, HLS will keep an equity sliver worth about $25 million to $30 million.

Basically, it's a sign that HLS sees potential in the division – but it also must deal with restructuring its operations. Might as well allow TPG to use its magic on the division, huh?

In fact, the deal will go a long way in paying down HLS's debt load.

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

Need to borrow $10 billion? Or how about $20 billion? No problem –- at least for some exclusive private equity firms, such as Blackstone and KKR.

Over the years, these firms have built tremendous franchises – as well as trust with lenders. They have undergone different market cycles and understand how to deal with deals that go sour.

But, there's a bonus lately; that is, interest rates are low.

A recent piece in Bloomberg.com takes a look at all this. For example, last year, KKR was part of the group that purchased HCA, a major hospital operator. Well, within three months of the deal, KKR was able to get a better loan at lower rates. Instead of paying 2.50% over LIBOR, the debt is now priced at 2.25%. That seems small , but this is for $12.8 billion in debt.

In fact, there have been about $64 billion in buyout refinancings this year (which exceeds the amount for all of 2006).

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

Yet again, Merrill Lynch & Co, Inc. (NYSE:MER) had a strong quarter, with net income surging 68% to $2.35 billion. There was strength in trading, asset management and of course, investment banking.

But there was another key source of income: investments in buyout deals. And, according to a recent piece in the Wall Street Journal [a paid service], it does pose serious risks.

True, it's lucrative. After all, Merrill also scores big fees on the private equity transactions. Yet, Merrill is making some big bets. For example, it shelled out $1.5 billion for its stake in HCA. This is a hospital chain that must deal with unpredictable government regulations. Also, the deal was done at a fairly high valuation.

So far, though, Merrill's private equity forays have been getting nice returns, especially with the Hertz Global Holdings, Inc. (NYSE:HTZ) deal. But there are many things that can go wrong: a botched deal; a credit crunch; a recession; a bear market.

Interestingly enough, back in the early 1990s, Merrill left the buyout business. Yes, it was because of some ill-conceived deals.

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

A recent piece in the Boston Globe has a insightful look at some of the ramifications of the flood of private equity deals. The author, Steven Syre, takes a look at the massive buyout of the Hospital Corporation of America, which is a hospital operator. The buyout price came to about $21 billion.

Of course, because of the deal, the company will need to load-up on debt, which means a lower credit rating. This is particularly bad news for existing bondholders of HCA. On the announcement of the deal, the bonds sunk about 15%.

And there's more bad news: the bonds will not be redeemed. Rather, they will be assumed by the private equity buyers.

Thus, before you buy some high quality bonds, you might want to think again – especially since big-time companies are now the targets of buyouts.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.

HCA, which is the biggest hospital company in the US, is going through the leverage buyout process. This means borrowing huge amounts of money – such as from banks and bond investors.

Well, it looks like there is little trouble raising the capital. Today, HCA was able to issue $5.7 billion in high-yield bonds.

Actually, keep in mind that "high-yield" has another name – ie, "junk bonds." These are bonds that have a relatively higher risk of default. In particular, the bonds have terms of 8 to 10 years. And, what do investors get? The yields range from 9.125% to 9.25%.

That's certainly better than what investors can get from the Treasury market.

Yet, there is definitely some risk. If HCA has trouble, so will the bonds. But, hey, that's for another day.

Something else: with the ease of the HCA financing shows there is lots of liquidity for buyout bonds. Actually, the next mega deal to get financing is Freescale, which will involve $9.4 billion in bonds.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Financial Statemet. He also has a blog at www.taulli.com.

It's been party times for private equity (PE) firms. Some of the funds are now reaching $10 billion to $15 billion in size, causing massive companies – like Harrah's and HCA – to become targets of PE firms.

Well, now Business Week has a cover story on it. The title says it all: "Gluttons at the Gate."

Essentially, PE firms have nifty techniques to extract cash from their portfolio companies:

• Advisory fees and management fees: these can easily be multi-million dollar paydays.
• Dividends: these may payback a large amount of the equity the PE firms invested in the target company.
• More debt: Hey, to pay a large dividend, a company usually needs to load-up the balance sheet with debt.
• IPO: file to go public and then sell shares to the public...and a slug of the cash goes to PE firms.

The huge growth in PE has a variety of factors: the low valuations because of the bear markets from 2000-2002, cheap debt, and lack of competition from strategic buyers.

However, there are now signs that PE is getting frothy. For this year, PE funds have raised about $159 billion. That is, these firms will probably be tempted to do low-quality deals – so as to put all this money to work. In other words, over the next couple years, there may be some blow-ups.

Already, though, some funds are sensing that there may be a backlash. For example, in a piece I did for BloggingStocks.com yesterday, Cerberus hired the former Secretary of Treasury to be its chairman.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

Private equity, in my opinion, is the juiciest of all the financial sectors. While venture capital is more baldly a gamble -- after all, something like 10% of investments actually pay out handsomely -- private equity is a quieter, stuffier, much, much larger gamble. It makes my blood gurgle with excitement.

Private equity firms have been gambling big, of late, and, according to the Wall Street Journal [subscription required] at this wee hour of the morning, they might do even more so by orchestrating an LBO of Harrah's Entertainment, Inc. (NYSE:HET). Naturally, the biggie of all private equity gamblers, Texas Pacific Group, is rumored to be involved in the talks to buy out Harrah's, which has a $12.34 billion market value and $10.2 billion in debt. Now there's some leverage.

While this would certainly be the biggest casino company ever bought out by a private equity group, it wouldn't be the first casino company -- Colony Capital, also rumored to be in on discussions, has bought several properties in Atlantic City and Las Vegas -- or the first huge gamble. After all, there's HCA Inc. ($21.3 billion), in my mind (and I was analyst on many a hospital deal in my time in investment banking) a huge hospital management company like HCA is a huge gamble. In hospitals you have two very egocentric, impossible-to-predict, and money-hungry groups pulling your cash flow this way and that: doctors and the U.S. government. Ick.

Once upon a time, back in the late 1980s, management of RJR decided to buyout the company. It did not take long until other buyers came to the table – as the stock price soared. The deal eventually turned into history's biggest leverage buyout (LBO). The drama became a best-selling book, Barbarians at the Gate, as well as an HBO movie.

Could the same story be developing at HCA, which recently decided to an LBO? Well, according to a Wall Street Journal story, it appears that the Blackstone Group, which is a top private equity firm, is in the early stages of making a bid.

It would not be cheap. After all, it will need to top the existing offer of $21.3 billion. Even in the universe of master dealmakers, this is still a lot of dough.

Does this mean investors should buy HCA stock? Not really. Blackstone still needs to arrange financing, as well as bring other private equity firms to the table.

Besides, Wall Street pros are skeptical that a bidding war will break out, as the stock price is below the existing $51 offer.

I'm always leery to say "this time is different." But those who are running mega private equity firms are seasoned (such as Henry Kravis of KKR). Some still remember the excesses of the late 1980s and do not want to repeat them.

It's certainly good news for private equity firms, which are likely to get good deals on companies. But, as for public shareholders, they probably will not get nice premiums on these deals.

Recently, a variety of private equity groups have raised mega funds (over $10 billion). Well, such money is meant to be spent. And because of the large sums, it makes sense to target huge companies for buyouts.

And, we may be on the verge of the dealmaking. According to a Wall Street Journal story, HCA is at the late stages of negotiations to sell out for $21 billion. Apparently, the buyers include the private equity groups of Bain Capital, Kohlberg, Kravis Roberts & Co., and Merrill Lynch & Co.

Adding HCA's existing debt of $10.6, the transaction would actually have an enterprise value of $31.6 billion. This would set the record for the highest value for a private equity deal (the prior record holder was the RJR Nabisco deal in 1989).

Founded in 1968, HCA operates 182 hospitals and 94 surgery centers. The company has been weak lately – and so has the stock price. In other words, the private equity crowd sees this as a way to get a juicy deal. Something else: there are powerful long-term trends that should help HCA, such as the aging of the population and expected increased spending on healthcare.

Despite recent volatility in the equities markets, private equity appears to see this as an opportunity. And, with billions and billions in their coffers, they have the firepower to do a myriad of mega deals.