Traditionally, in a buyout deal, there is one private equity firm, which orchestrates the transaction and writes a check to buy the target's stock.

But, over the past few years, things have been changing. Now, we are seeing so-called club deals. Basically, this means that two or more private equity funds team-up on a transaction.

In other words, it makes it easier to do large transactions. What's more, it can help to diversify risk.

It all sounds logical, right? Well, according to a story in Financial News Online, there may be a problem; that is, when the investors look for an exit.

For the most part, private equity firms want to start liquidating their investment within a couple years. But, if there are several funds in the deal, will they all agree?

Not necessarily.

Well, there was a recent poll – from Private Equity News – that shows things can get pretty complicated. There are likely to be disagreements on a variety of issues, such as the management team, the payout of dividends, further acquisitions and capital investments.

True, it's still early to tell what may happen in many of these club deals. But, managers at private equity firms usually have big egos and that can mean lots of debate – and less time doing new deals.

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

As the Private Equity deal juggernaut continues at a record pace, the Justice Department continues to send out letters in their probe of PE competitive behavior. The Wall Street Journal reported today that Merrill Lynch & Co., Inc. (NYSE:MER) has joined this inauspicious list. Other letters in the same form, I am sure, will be received by other players. Any Justice Department investigation is bad news and a distraction, and I am sure there is concern throughout the PE industry.

The question at hand is whether PE firms, in pursuing the "club" deals (many firms getting together to pursue a large target, like a bunch of hunters combining to wrestle an elephant) are "colluding" to bring down prices for the assets they are pursuing, thereby undertaking anti-competitive and thus illegal behavior. The Journal speculates that the Hertz transaction is under particular scrutiny. This was not only a large club deal but one where the buyers made a lot of money VERY quickly. To the Justice Department, I am sure, the fact that big bucks were made in short order MUST mean illegal activity. The Federal Government seems to frown upon large scale success, and therefore must investigate.

I have not seen any of these love letters and can only speculate about the investigation, but the facts of life in Private Equity do not support a case for collusion.