The biggest deal in the room is usually the dumbest.

Would you have invested?

Put yourself back in 2007. A large Texas power utility. About $4 billion of EBITDA. A clear market position. Hard assets. Predictable demand. An 8.5x entry multiple, which at the time probably felt almost wholesome.

Three elite private equity firms pile in. Largest LBO in history at the time. $45 billion enterprise value. $8.5 billion of equity. $36.5 billion of debt.

On paper, it looked like exactly the sort of deal that makes people in midtown say things like "unique opportunity" and "once in a cycle."

The thesis was simple enough for everyone to nod along to it. Natural gas prices stay above $7 per MMBtu. If that holds, coal fired generation stays highly profitable. Cash flows stay strong. Debt gets paid down. Multiple holds. Everyone looks clever. More importantly, everyone looks expensive.

And this is where private equity does what private equity so often does. It mistakes a commodity view for an investment edge. Not an operational edge. Not a sourcing edge. Not some deep proprietary insight into customer behaviour or business quality. Just a very large bet on one external variable behaving itself.

Which is always comforting because commodities are famously stable and forecasting them is obviously a science, not a group hallucination with spreadsheets.

Then shale happened.

Gas prices didn't stay above $7.
They collapsed to below $3.
The thesis blew up.
The leverage that made the returns sing on the way in became a weapon on the way down.

The outcome:
$8.5 billion of equity wiped out.
Chapter 11 in 2014.

That is the part people forget when they romanticise the glory days of mega buyouts.

A lot of those deals were not genius.
They were giant macro bets wearing a capital structure.