KKR is known as a tough negotiator. After all, the firm walked from its $8 billion deal for Harman International (NYSE: HAR), which crushed the stock by 24% on Friday.

But, as for the First Data Corp. (NYSE: FDC) transaction, KKR is certainly jazzed. Despite talk that financing had dried up, it now looks like the debt offering is oversubscribed -- at least for a $5 billion tranche (this is according to a story in Bloomberg.com). Although, to generate more demand, there was a 4% discount on the notes.

But for the most part, it looks like things should pan out and based on the stock price of First Data, Wall Street also agrees.

Does this mean things will get easier for other deals? To some degree, I think the answer is yes. Liquidity is coming back into the system and fear is dissipating.

However, I think there will still be some carnage, especially for those deals that may not have the strong fundamentals of First Data or that were aggressively priced and structured.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

That the credit market climate has changed from a quarter ago is not news. That the new environment is imposing changes on even the most-preferred deals is, perhaps.

There's word that Kohlberg Kravis Roberts & Co. will most likely make concessions to banks in order to facilitate the $24 billion in debt needed to purchase First Data Corp (NYSE: FDC). FDC traded up 17 cents to $33.46 Tuesday at mid-day. KKR is buying credit card processor First Data for $34 per share. KKR's bid to take FDC private for that price is considered high because the bid is 14 times FDC's cash flow.

According to people familiar with the deal negotiations, KKR agreed to maintain a certain level of earnings before interest payments, depreciation, tax and amortization in relation to senior debt, The Wall Street Journal reported (subscription required).

The Wall Street Journal [subscription required] reports that Kohlberg, Kravis and Roberts (KKR) is negotiating with banks to lend it $24 billion for its $26.4 billion deal to buy payment processor, First Data Corp. (NYSE: FDC). What's at stake here is whether last month's pause in the private equity fueled takeover market is temporarily on hold or dead for a decade.

There is a $400 billion backlog of such debt deals in the pipeline. Prior to the August pause, banks had no trouble selling the debt to hedge funds and others. But the terms -- or covenants -- of that debt were so loose that the banks were creating loans that demanded very little in the way of performance.

These so-called covenant-lite loans may soon become a thing of the past. If the Journal's reporting is correct, KKR may agree to a covenant requiring it to maintain a minimum level of earnings before interest taxes depreciation and amortization (EBITDA). Such terms used to be common in debt offerings, but the fact that there is even any debate about it, indicates how much covenant-lite debt risk is currently out in the market for which debt buyers have no protection at all.

The 18% haircut on Home Depot's (NYSE: HD) sale of its supply unit was not much of a surprise. Real estate continues to ail and the credit crunch added to the pressures. But the big test for private equity is KKR's upcoming $29 billion buyout of First Data Corp (NYSE: FDC).

Well, Barron's [a paid publication] has an excellent analysis on the deal, which will require a whopping $24 billion in debt financing and is expected to close at the end of the month.

So, will there be pushback from the lenders -- which include Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Lehman Brothers (NYSE: LEH) and Merrill Lynch (NYSE: MER)?

Keep in mind that First Data already has a sizable debt load. The pricing on the new debt could sustain a material discount. If so, the lenders may need to take a write off or sell loans at a loss.

For example, First Data's interest payments may eat up most of its free cash flows. And, if the growth slows down, there could be negative cash flows.

In a restrained credit environment, this is not what lenders want to hear. In other words, I think we could see some fighting from the lenders to try to get a lower price on this deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements

Kohlberg Kravis Roberts & Co.'s $25.6 billion buyout of First Data Corp. (NYSE:FDC) won't hold the spot of the second-largest buyout for long.

Tthe top-ranked $45 billon TXU deal, which also includes KKR, will get eclipsed as well.

There's bound to be another mega LBO sooner rather than later. KKR, The Blackstone Group and Texas Pacific Group all have billions of dollars burning holes in their pockets.

What people seem to be forget is that these firms don't want their investments to remain private forever. Odds are good that investors will get another shot at buying shares of First Data in a few years. Maybe then being public will be back in style.

First Data should thank its lucky stars that it's being acquired by KKR.

Growth at the credit-card processing company has been slowing since it separate its Western Union payment processing business and has struggled to find a chief executive to succeed Henry C. "Ric" Duques, the Wall Street Journal said.

Duques who returned in November 2005 after his successor Charles Foote announced his retirement for "personal reasons." At the time, Duques agreed to stay for about two years to help the company find a new successor.

Investors have sat on the sidelines while First Data searched for new leadership. Its stock tanked more than 40 percent over the past year even though most Wall Street analysts rate it either a buy or a strong buy.

Analysts had said First Data would make an atractive buyout candidate for private equity. My colleague Georges Yared makes a persuasive case that the company's prospects are good.

In addition, First Data stands to profit handsomely from the private equity boon. All of those credit card purchases by investment bankers of first-class airplane tickets, suites at fancy hotels and expensive bottles of wine have to be processed somewhere, no?

Kohlberg Kravis Roberts & Co. is reportedly about to make a bid for electronic payment processor First Data Corp. (NYSE: FDC). The price talk is in the $26 billion range. The shares closed Friday at $26.90, giving the stock a market capitalization of $20.26 billion. First Data has been a consistent presence in the entire food chain of payment clearing, merchant payment management and all the attendant services within the industry.

First Data is a household name in the industry. So why is venerable KKR willing to pay $26 billion or so for what sounds like a commodity business?

First, take a look at the cash flow from First Data's operations. It runs about $2 billion per year, or about an 8% cash flow yield. First Data Corp also has great potential for expansion internationally.

The future growth engine for the industry is in what's known as dynamic currency conversion (DCC). DCC is presenting a "bill" to a customer using a foreign-issued credit card, in the customer's local currency. For example, if a customer charges a hotel bill in Paris on his American issued Visa card, the customer normally would need to wait for the monthly statement before knowing what the Euro converted to in dollars. With DCC, the hotel processes the credit card charge in dollars -- instantly. There is margin to be captured by the credit card issuer, the acquiring bank and the merchant itself in this new twist in the credit process.

DCC will provide an avenue of growth and expansion for payment service companies. What's needed to implement the dynamic currency conversion systems is an infrastructure. The infrastructure, once in place, can be leveraged to the point of very high cash flow yields.

First Data has the massive infrastructure and the relationships in place. If KKR were to acquire FDC, it would be poised to benefit from DCC -- the next logical growth aspect to the business.

FDC has had some internal management strife and turnover. So, in spite of the high cash flow, banking relationships in place and the possibility of renewed growth, I think shareholders should still welcome an instant jolt of profit by a KKR takeover.

Georges Yared is the chief investment strategist of Yared Investment Research. Please visit www.georgesyared.com