Not only are the number of deals involving private equity firms buying and selling from fellow buyout shops increasing, but the size of these transactions is booming, according to Dealogic. Secondary volume is nearly double year-to-date compared with the same period last year. Take a look at this private equity selling to private equity chart, courtesy of Dealogic.

Year       Size ($m)       # 

2003         29,770.7    135
2004         61,931.8    234
2005         82,001.2    327
2006         99,998.0    337
2006 YTD  26,679.1    138
2007 YTD  58,992.2    155

Blackstone Group’s deal on Sunday to buy Alliant Insurance Services Inc. for $1.2 billion from fellow sponsor Lindsay Goldberg is an example of this kind of purchase, known in the LBO market as a secondary buyout.

Given that private equity firms are equipped with a record amount of cash, selling to other financial sponsors makes sense.

But such deals also invite a fair amount of scrutiny. Is a private equity buyer getting a restructuring opportunity or a hot potato? Since LBO firms are known for cutting costs and improving cash flow, how much operating efficiencies are there to squeeze out from a fellow LBO firm’s portfolio company?

Blackstone plans to roll up more insurance brokers using Alliant as a platform, but there are plenty of secondary deals out there where the growth angle isn’t as clear. Regardless of where one stands on the matter, secondaries are clearly growing in number and in size–. So who’s up for another helping?

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