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Reporter's Notebook: How Private Equity Runs Wall Street

By CNBC.com

With help from international investors and free-flowing financing from big banks, private equity is driving a recent explosion of big M&A deals.

Behind the M&A Boom

In this CNBC.com "Reporter's Notebook" video report , CNBC's David Faber and Managing Editor Tyler Mathisen detail the factors that are empowering private equity.

Big investors chasing bigger returns than conventional investments are increasingly pouring money into private equity and hedge funds. All that cash, along with free-flowing loans from big commercial banks, is being used to buy what are seen as undervalued companies that can be fixed up or broken up and then resold.

As a result, the "old LBO guys," as Faber calls the new PE, "really run Wall Street in some ways."

How long can it last?  Faber says even people behind private equity think "something's going to happen" that will bring a greater recognition of risk back into the marketplace but even they don't know what that something might be.