By Jen Saarbach & Kristen Kelly, Co-Founders of The Wall Street Skinny
Kristen here, I walked onto the Morgan Stanley trading floor in 2007, the year KKR, TPG, and Goldman Sachs Capital Partners led what was then the largest leveraged buyout in history: TXU, the Texas utility later renamed Energy Future Holdings. The deal had an enterprise value of roughly $44-45 billion, and was a textbook example of how LBOs were financed at the peak of the pre-crisis boom.
A consortium of sponsors (KKR, TPG and GS) pooled together about $8 billion of equity; the rest of the purchase price, $36 billion, was funded with debt. The largest chunk, about $24 billion, came in the form of senior secured bank loans. These were syndicated, meaning a lead group of arrangers (Citi, JPMorgan, Goldman Sachs) structured the loans and then sold pieces to a broad syndicate of other banks (Credit Suisse, Morgan Stanley, and many more) in what is called the Broadly Syndicated Loan market or BSL.
I was just starting on the CLO (collateralized loan obligations) desk at Morgan Stanley, and I remember seeing slices of those loans in the “warehouses” for CLOs, part of what became known as the wave of “hung deals”.
In practice, banks would accumulate loans in a temporary “warehouse” facility while they arranged permanent financing through CLOs, a way banks could get bank loans like what they lent to TXU off their balance sheet. When the credit markets froze in 2007-2008, those warehouses filled with unsold paper the banks couldn’t distribute, leaving billions stuck on balance sheets and forcing fire sales.
The balance of the financing, roughly $11 billion, was raised in the high-yield bond market. That meant issuing debt in the public markets at high coupon rates, which institutional investors and funds could buy. Together, this mix of syndicated bank loans and high-yield bonds was the classic 2007 LBO playbook: leverage parceled out across every corner of Wall Street.
Now we can skip over the minor detail where TXU (renamed Energy Future Holdings) filed for one of the largest bankruptcies in U.S. history. Details…but the bet sponsors took on energy prices turned out to be spectacularly wrong. Ultimately, the mountain of debt that looked manageable in 2007 suddenly became a noose around the company’s neck.
Fast-Forward to EA
Jump to today: Electronic Arts agrees to a ~$55 billion LBO led by Saudi Arabia’s PIF, Silver Lake, and Affinity Partners, setting the new record for largest PE buyout in history. The financing for the deal comes in about ~$36 billion in the form of equity (cash contributed by the sponsors), with $20 billion of debt fully and solely committed by JPMorgan (about $18 billion expected to fund at close). It’s also notable that you have a consortium of investors pooling capital together to fund the equity check, something that was classic in the mega deal boom of 2007, but which fell out of favor due to alignment and governance headaches, lawsuits, and the fact that post 2007 PE mega funds like BX, KKR etc. were raising massive funds in their own right as deal sizes came down. Post GFC we didn’t see megadeals like this until, well…now.
The most important things to notice:
- A single-bank mega-commitment. JPMorgan’s $20 billion financing commitment is reportedly the largest single-bank underwrite ever for a buyout. Unlike the 2007 “everyone in the pool” approach, this structure signals
(a) sheer balance-sheet firepower,
(b) confidence in eventual distribution (meaning, no fear of a hung deal), and
(c) optionality to blend syndicated loans, high-yield bonds, or private credit depending on market windows.
- Private credit is now a first-class citizen. In 2007, private credit was niche. Today, scaled direct-lending complexes are central to buyout financing. Banks now straddle both worlds: JPMorgan and Goldman run in-house direct-lending funds, while Citi and Barclays have partnerships. That optionality means fewer “Twitter-style” hung deals if markets seize up.
The New Bank–Private Credit Symbiosis
JPMorgan’s $20B debt package is classic leveraged finance, meaning: financing an acquisition heavily funded by debt. But the existence of its own $50 billion direct lending pool provides a safety net. If syndication stalls, it can shift debt into private credit vehicles. In effect, private credit has become both a competitor and an ally. Banks can use it as a pressure valve when public markets are shut.
Most major investment banks now have this dual-track capability, either through internal funds or partnerships. It gives them flexibility that the TXU-era arrangers lacked. Rather than being stuck with billions in unwanted risk, banks can toggle between BSL, bonds, and private credit, tailoring financing to market appetite and borrower needs.
EA Financing Structure and Leverage
Looking only at the $18 billion in debt expected to fund at close (ignoring an undrawn working capital facility), the leverage works out to about 7.5x EA’s LTM EBITDA. That’s not excessive by today’s LBO standards and is actually lower than TXU’s 8.5x leverage ratio in 2007. On valuation, the total enterprise value implies 20x EBITDA, with sponsors putting in roughly $36 billion of equity, or about 65% of the deal value. That’s a far more conservative equity contribution compared to TXU, where sponsors put up just $8 billion (less than 20% of the total deal).
History doesn’t repeat, but it rhymes…
Let’s note the parallels to the TXU LBO:
- Scale. Both TXU and EA stand out for sheer size: record-setting enterprise values with tens of billions of equity and debt, forcing sponsors and banks to stretch the limits of the financing markets.
- Distribution risk. Even with JPMorgan’s sole-bank commitment, someone ultimately has to hold the debt, whether it ends up in BSL, HY, private credit, or some combination.
And what’s changed since 2007:
- Club vs. co-invest dynamics. TXU was a true club deal, KKR, TPG, and Goldman Sachs Capital Partners (GSCP), all marquee operators, pooling capital and governance. EA looks a little different: Silver Lake is the clear lead, PIF is more likely a passive co-investor, and Affinity’s role is less defined. Strip Affinity out, and the structure feels closer to a Silver Lake-led buyout with LP-style co-investors than a club of equals.
- Financing flexibility. EA’s deal can toggle between BSL, bonds, and private credit depending on conditions, versus 2007’s heavier reliance on loans and HY alone.
- Single-bank underwriting scale. A $20B sole commit compresses syndication complexity and gives JPMorgan more control over timing.
If you remember one thing…
In retrospect, TXU’s massive LBO and subsequent bankruptcy was a tale of the excesses of the credit boom and ultimate global financial crisis (Jen here: not only did I have a front seat to the Lehman bankruptcy at the epicenter of the GFC, but I also worked on the commodities and interest rate hedges for the TXU deal).
In 2025, EA shows how mega-deals are financed today. With fewer banks doing bigger underwrites, private credit as both a competitor and safety net, and a modular capital toolkit.