Over the past decade we seen at least $1 trillion dollars spent by private equity firms. These firms have taken over companies for a pittance and then pillaged them by slashing employees and cutting costs. They then used the money to pay down debt rather than rebuilding the company.

Now all of the debt thrown on the acquired companies is coming due and it could cause another economic disaster, even bring down the economy.

There's been lots of dealmaking with online travel portal, Orbitz Worldwide Inc. (NYSE: OWW). Back in 2003, the company went public, and then a year later sold out to Cendant. Cendant then meshed its online travel properties into a new unit, called Travelport, which was then sold to the Blackstone Group (NYSE: BX).

And the dealmaking continued this week as Orbtiz raised a cool $510 million in an IPO. Unfortunately, investors were not impressed. The IPO was priced at $15, which was below its $16-$18 range. The stock then fell 3.3% on its first day of trading.

But the IPO proceeds won't go to Orbtiz. Rather, the cash will flow back to the parent company, Travelport (in a special dividend). In other words, the IPO is really a cash-out -- not a way to help build Orbitz.

True, Orbitz has some nice brands – such as CheapTickets.com and eBookers.com. But the fact is that the online travel space is highly competitive, with players like Expedia Inc. (NASDAQ: EXPE) and Priceline.com Inc. (NASDAQ: PCLN).

Another big issue: the company has never posted net income. So, I can understand why Wall Street has some concerns.

Also check out some of the other IPOs of the past week.

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

See also:
Jonathan Berr: The appeal of Expedia and Orbitz eludes me
Tom Taulli: Blackstone wants payback with Orbitz IPO

The on-line travel business is coming out of its first major downturn. Who is positioned to benefit most from the current upswing? Expedia Inc (NASDAQ: EXPE) is being mentioned more frequently. So much so that the on-line travel giant announced a $3.5 billion share repurchase this morning.

Thomas Weisel believes Expedia is in the early stages of a potentially material turnaround, regardless of any LBO or buyback and has placed a $37/share price target, in a report published yesterday. Expedia's stock rallied late last week on news that it might be taken private. Barry Diller, the on-line travel giant's CEO, owns 58% of the voting stock.

Much of the on-line travel business has gone through considerable consolidation as financial buyers bought up Travelport (Cendant's on-line travel business) and Sabre Holdings, which owns Travelocity, was acquired by Silver Lake and Texas Pacific Group. The change in ownership helped add pricing discipline to the market.

Expedia has invested close to $1 billion in developing software to improve services and develop new products. So much for believing the Internet has low barriers to entry. Who is going to be able to replicate a decade of code writing to surpass the purest Internet travel play. The answer is no one.

Expedia changed management a year ago and is beginning to see the fruits of new strategies. In addition, Expedia appears to benefit from economic slowdowns as its on-line reservation platform is a great vehicle to reduce excess hotel room inventory. Stock upgrades, LBO speculation and improved operating performance all bode well for Expedia shareholders.

Back in late June, The Blackstone Group and Technology Crossover Ventures (TCV) shelled out about $4.3 billion to buy the travel assets of Cendant, called Travelport. The assets are extensive, including CheapTickets, Orbitz, Gullivers Travel Associates and the Galileo global distribution system (GDS), which processes airline tickets.

The goal for Blackstone/TCV: build a much larger travel distribution company.

Well, it has wasted little time. This week, the company purchased Worldspan for $1.4 billion. The company is a dominant player in the GDS space.

All in all, the deal makes a lot of sense. There should be big cost savings – as well as top-line growth opportunities (in terms of cross-selling). The combined company will have roughly $3.5 billion in revenues.

But it is still risky. After all, airlines are trying to avoid – or cut pricing – with GDSs. Of course, the Internet is a threat. What's more, there will be serious challenges in terms of integration of the complex organizations of Travelport and Worldspan (ie, both have different technology platforms).

But there were two key winners: Citigroup Venture Capital Equity Partners and Ontario Teachers' Pension Plan. These firms purchased Worldspan in 2003. And, because of the Travelport deal, they generated a tidy 250% return.

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