BARBARIANS AT THE TOP

Buyout funds raised a staggering $131 billion last year, double the total in 2004, and are on pace to exceed that figure this year. But success in raking it in is followed naturally by an urgent need to put it to work - and that's where the trouble starts. Buyout veterans - while denying their own vulnerability, of course - point to the industry's increasing pack mentality as an area of concern. Not only do private-equity firms tend to invest over and over in the same kind of deal - mattress makers, yellow-pages directories, and private education companies have been all the rage - but they're working now with more partners, a phenomenon known as a "club deal." Sharing deals in this way ostensibly spreads out the risk. Yet the mutual reinforcement of group buying can also increase the likelihood of overpaying.