The Great Global Buyout Bubble

By ANDREW ROSS SORKIN

Published: November 13, 2005

A YEAR ago this week, Henry R. Kravis, the legendary buyout mogul who invented the modern-day private equity industry, gave a rare speech to a group of investors in a ballroom of the Waldorf-Astoria. In describing how far the business had come, Mr. Kravis, a slight man with a dry wit, recounted how difficult it had been for him to raise $355 million to buy one of his first companies, Houdaille Industries, in 1979.

"The availability of financing was our biggest challenge," he said. "Literally, we had to add up the potential capital sources at that time, which consisted of several banks and insurance companies, and one by one go out and raise the money."