Whenever a major LBO deal is announced, there is analysis of the incurred debt and related leverage terms. The idea is to get a sense of how the company will operate post-transaction, and if the sponsors are loading on more loans than a company can reasonably handle.

    But, as we've learned over the past few years, banks rarely are willing to put companies into default. Maybe it's because they don't want to incur short-term losses (even if it creates long-term gains). Or maybe it's because they don't have in-house teams to manage such assets (even though they could hire such teams from large LBO shops).

    What we got instead was "amend and extend," where banks take a pinch of flesh from LBO firms in exchange for kicking the expiration can down the road.

    I bring this up today because of a comment made last week by a private equity researcher, in discussing industry overhang (which is mostly concentrated in 2006-2007 vintage funds that are nearing the end of their investment periods. She noted that in two decades of covering PE, only once had she seen a fund's lifecycle expire without asking LPs for an extension (which LPs almost always provide, typically with fee modifications).

    In other words, what we originally analyze when a deal gets done or fund gets raised is often rendered irrelevant with the passage of time. Yet another reminder that private equity is about ends, not beginnings…