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If you walk away with nothing else from iStar's $1.9 billion purchase of commercial real estate assets from subprimer Fremont General (FMT), it should be that money is burning a hole in private equity's pockets. With Fremont General, it's not that the assets don't have value, it's a question of what they're really worth. (I've heard of some potential buyers who passed on the assets at lower prices.)

These recent numbers from Thomson Financial should help understand this a little better:

Worldwide M&A volumes total $2.18 trillion, a 77% increase from a year ago. In the U.S., the value leaped by 54% to $802 million.

Worldwide private equity deals totaled $447 billion, a 114% increase over a year ago. During the same period, U.S. private equity leaped 200%.

Here's the number I feel is the most telling: While year-to-date worldwide private equity M&A rose four percentage points to account for 20.5% of all activity, it accounts for 35% of all U.S. M&A deals, up 16.3% from a year ago.

Some of that, as my colleague Alistair Barr pointed out yesterday, is the result of investment bankers themselves doing deals. To which I say: Go back and read my interview from two weeks ago with private equity pioneer Warren Hellman, who said that among the mistakes being made by private equity are that deals are being done, in some cases, by recovering investment bankers.

The trouble with that, he said, is that the investment banking mentality is more about how to get deals done, compared with the private equity mentality, which is to first ask why deals shouldn't be done.

Put another way: We're at that point in the cycle where discipline is giving way to momentum and euphoria.

The beat goes on...

Source: Private Equity: Discipline Is Giving Way to Momentum and Euphoria