The New York Post reports that five years after taking Toys "R" Us private for $6.6 billion, "the retailer's private-equity owners are angling to cash in with an initial public offering this summer."

Bain Capital, Kohlberg Kravis Roberts and Vornado Realty are the current owners of the 860 Toys "R" Us stores in the United States, along with 716 international stores.

In the past five years, quite a bit has changed in the toy industry. Leading competitors FAO Schwarz and KB Toys collapsed as a result of the recession -- with Toys "R" Us acquiring the former off the scrap heap. According to the Post, "The retail industry reported only mildly positive holiday sales last month, but Toys 'R' Us boasted a solid gain of 4.6% in its domestic comparable sales for December, helping offset a companywide decline of 3.5% in last year's fourth quarter."

Proving that it's never too late to try to get into heaven, 63-year-old former Lehman Brothers CEO Richard Fuld is reportedly trying to raise funds to lend money to small businesses.

The New York Post reports that "Sources tell The Post that the usually gruff Fuld is trying to raise funds from private equity and other investors that would provide aid to small businesses seen as 'growth companies.' The aid would be provided by using his Rolodex of market contacts to help firms raise capital or by providing financing, people familiar with the matter said."

California start-up Fisker Automotive has received a $529 million loan from the U.S. to try to build a hybrid sports car in Finland.

$529 million of your money. To build a sports car. In Finland.

News of the Fisker loan comes amid questions about the controversial $465 million taxpayer loan to Tesla at a time when the Silicon Valley-based electric car start-up has already raised over $200 million in private venture capital from prestigious VC's like Draper Fisher Jurvetson, cash-rich companies like Google (NASDAQ: GOOG), and the likes of JPMorgan Chase (NYSE: JPM).

Platinum Equity, the private equity firm that recently bought The San Diego Union-Tribune, has joined the bidding to acquire The Boston Globe from The New York Times Co. (NYSE: NYT).

The New York Times reported that "Platinum, based in Beverly Hills, bid $35 million and would assume $59 million in pension liabilities, according to people briefed on the process, who asked not to be named because they were not authorized to discuss the matter."

During the private equity boom years, one of the most common criticisms of the private equity kingpins went like this: "All they do is buy companies at a discount, leverage up the balance sheet, and use the cash flow to pay off the debt -- extracting millions in fees in the process."

Well now that access to cheap, covenant-lite debt has dried up, buyout shops are turning to the other option for making money: operational improvements. A new white paper released by Grant Thornton and the Association for Corporate Growth -- admittedly a private equity trade group -- found that 42% of private equity firms are devoting between 51% and 75% of their time on the management of companies they already control.

When The Blackstone Group (NYSE: BX) went public, many observers -- myself included -- were concerned by the total lack of corporate governance checks and balances.

But at the time, the private equity industry was so hot that Blackstone could do no wrong, and no one cared enough to complain. But now that KKR is mulling a plan to list on the New York Stock Exchange, things could be different. The wheels have come off the industry, at least for now, and the arrogant attitude of "We'll tell you what we feel like telling you and you'll like it" may not play so well.

Many of the bit players are being flushed out of private equity by the tight credit market, and Fidelity Investments, which will close its private equity division next month, is no exception. While buyouts have never been a significant part of the company's business, the firm was managing $500 million as part of an operation that was founded two years ago -- at or near the height of the private equity boom.

Fidelity's private equity arm has investments in four companies, but spokeswoman Ann Crowley told (subscription required) The Wall Street Journal that "Basically debt financing is largely unavailable because of the economic conditions of the last several months."

The credit crunch has pretty much brought the private equity industry to a halt: Without access to cheap, readily available, debt with liberal terms, the leveraged buyout shops lack the paper they need to get the deals done.

But the Wall Street Journal reports (subscription required) that some firms are now trying "equity buyouts" or EBOs -- deals that involve taking companies private without the use of debt. With companies available as cheap as they are now, some titans are betting that they can earn excellent returns without the leverage the has historically led to outsized profits.

Apollo Management acquired Realogy -- the parent company of real estate brokerages like Century 21 and Coldwell Banker -- at precisely the top of the real estate bubble.

So far the results have been about what you might expect. Now Apollo is pumping another $150 million in (subscription required) to keep the deal afloat through 2009. The company says that combined with the big cost cuts it's implemented over the past three years will be enough to save the company. Investors disagree, with some of the bonds trading for as little as 11.5 cents on the dollar suggesting a high probability of bankruptcy.

2008 was one of the worst years for private equity deal volume in awhile -- an abrupt end to the boom years marked by the high-profile bankruptcies of companies like Linens n' Things.

But that could be changing: sort of. The number of bad deals of the past few years has led to a growth in "loan to own" deals: vulture private equity firms that lend money to companies struggling under the weight of earlier buyouts with the goal of gaining control over the equity.

The Wall Street Journal reports (subscription required) that buyout flops like Real Mex Restaurants and Bally Fitness are finding themselves under the ownership of new private equity firms after the original deals go south.

But 2009 could also represent a comeback for private equity in the traditional sense if credit markets loosen up. Interest rates are at historic lows and the stock market has taken a pounding leaving a number of profitable companies trading at valuations that make them extremely attractive takeover targets.

If the credit markets return to normal levels of activity, private equity could be a major catalyst for the market's rebound over the next few years by taking private many of the undervalued companies that are driving the market down.

Not much more than a year ago, private equity firms were the masters of the universe. Graduates of the top business schools who once wouldn't have dreamed of anything other than investments banking were beating down their doors for a chance at seven-figure bonuses.

Now the private equity bubble -- along with the housing and credit ones -- is deflating. A new report from Heinrich Liechtenstein, a professor at Spain's IESE Business School, and Heino Meerkatt, a Munich-based senior partner and private-equity expert at Boston Consulting Group predicts that a astonishing 20-40% of private equity firms will go under. Thirty percent will survive and have a shot at prospering over the long-term. The remaining 30-50% will "hang in the balance" -- not shuttering just yet but not exactly the influence-peddlers they once were.

The role that private equity firms have played in the stock market over the past few years has been hugely important. By making bids for undervalued companies, buyout shops provided activist investors with an outlet for activating value at companies that had underperformed. Without the benefit of private equity firms, activist hedge funds will have a new challenge: Can they create alpha through more long-term oriented approaches like management changes, seats on the board of directors, and operational insight? It will be interesting to watch.

In February of 2007, Blackstone Group (NYSE: BX) boss Stephen Schwarzman spent $3 million on his own birthday party at the Park Avenue Armory. Patti LaBelle and Rod Stewart (singing 'Reason to Believe' perhaps?) provided the entertainment for the 500 guests.

The lavish excess was ill-timed, as the industry went sour shortly thereafter. A few months after that party, Blackstone went public in the $25 per share range. Now the stock trades at less than $9 and the orgy surrounding Schwarzman's $8 billion cashout helped fuel calls for increased regulation of private equity.

Now Schwarzman regrets the whole thing -- or at least the birthday party. Speaking at a conference in New York, he said that "Obviously, I wouldn't have wanted to do that and become, you know, some kind of symbol of sorts of that period of time. Who would ever wish that on themselves? No one."

Indeed. Who would ever want to become a symbol of having enormous amounts of money? How awful.

Since filing for bankruptcy in July, Mervyn's has been closing stores and fighting for survival in a much-smaller form. But now the company has announced that it will close its 149 remaining stores, with going out of business sales set to begin shortly.

In a press release, CEO John Goodman announced that "We are disappointed with this outcome but the Company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action."

The company was taken private by a group including Cerberus and Sun Capital back in 2004, and that deal is now the subject of considerable controversy. Last month, the bankrupt company sued its former owners, alleging that the deal was structured to separate the operations from the real estate, and that the private equity owners then proceeded to sell real estate, pay themselves dividends, jack up lease payments, and essentially transfer value from the chain to the private equity buyers.

It remains to be seen what will come of that lawsuit but, if it goes to trial, it will be an interesting case that looks at the role of private equity in the financial world.

The Wall Street Journal reports (subscription required) that private equity heavyweight JC Flowers & Company recently told its investors that it had marked down $6.5 billion worth of holdings by 30%.

That's not good news but it's interesting to note how much worse off Mr. Flowers would probably be if he'd been able to do all the deals he wanted. In 2007, Flowers was set to pay $25 billion for student lending giant SLM Corp. (NYSE: SLM). That deal fell apart and the stock is down about 80% since then on credit market turmoil. Flowers was also a contender for Bear Stearns.

But Flowers isn't backing down. He recently raised $2.5 billion last month for a third fund and received regulatory approval to buy a small Missouri bank.The Journal adds that "Although it is a flyspeck of a transaction -- the bank has just two branches and $14 million of assets -- the deal provides Mr. Flowers a base from which to acquire failed banks or their deposits."

Recent gaffes aside, Flowers has an excellent reputation as a bargain-hunter, and the fact that he's building his war chest with an eye toward the financial sector should give investors something to think about.

One of the most common complaints about private equity companies (and activist investors, corporate raiders, etc.) is that their relentless focus on making a quick profit results in the looting of companies, job losses, and so on.

That theory will be tested in court: Mervyn's LLC has sued its former private-equity owners -- including Cerberus and Sun Capital -- alleging that their profiteering tactics led to the chain's bankruptcy. When the $1.26 billion deal was consummated in 2004, The Wall Street Journal reports that (subscription required) "the deal was structured as two separate transactions -- one for the retailer and a second one for the retailer's real estate. This complicated structure, the suit alleges, enriched the private-equity firms while leaving the retail operations insolvent."

The firms then sold off real estate, paid themselves dividends, jacked up lease payments, and essentially transferred value from the chain to the private equity buyers, according to the lawsuit.

This will be a must-follow case -- assuming it isn't settled quickly and confidentially -- for those looking to understand the larger effects of buyout shops. I'm skeptical of the notion that private equity firms destroy companies and, if that was indeed the case with Mervyn's, it may have been a result of the complex structure and self-dealing.

In most cases however, there is little money to be made bankrupting something for which you pay hundreds of millions -- or billions.