With so many companies being taken private, what’s going to happen once they’ve been flipped and taken public again? Possibly en masse? Bad things, that’s what.

Over the last two years, a flood of public companies, including some of the most recognizable names on the markets, have gone private. But when will they go public — again? And if there’s a long line for initial public offerings, will private equity firms have a tough time cashing out?

The deal flow has been staggering, with private equity undeniably on a tear. From 2005 through last week, the market has witnessed 1,287 leveraged buyouts, with a total value of $787 billion, according to data from Thomson Financial.

But buying is the easy part. “Any fool can buy a company,” Henry R. Kravis, one of the buyout industry’s godfathers, said earlier this year. “You should be congratulated when you sell.”

So what will happen when buyout firms try to bring the companies they have acquired back onto the market? In a research note in June, Tobias M. Levkovich, Citigroup’s chief United States equity strategist, wrote that investors fear that current deals will come back in the near future as a glut of stock offerings, causing a drag on stock prices.

“What happens when all this stock comes back on the market?” Robert B. Reich, the former labor secretary, said in a radio commentary in May. “The loud thud you’ll hear will be the sound of shares falling back to earth.”

Meanwhile, the heat is on when it comes to selling. Although buyout firms typically plan to wait three to five years before selling companies in their portfolios, many firms, especially those in the middle market, are feeling pressure to exit their investments more quickly, said Peter Fitzpatrick, a partner at Bryan Cave, a law firm.

(Continue reading this story on New York Times)

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