Sure, Sallie Mae looked good back in April. But that was before the debt keg got tapped out and Sallie's suitors sobered up.

Now the $25.3 billion deal to take over Sallie Mae, the country's largest student loan provider, seems in jeopardy. Part of the reason is that the proposed federal cut in education loans would make Sallie Mae less attractive. But the overarching concern, experts say, is that the debt needed by the J.C. Flowers-led consortium to finance the highly leveraged deal just became much more expensive.

Sallie Mae is far from the only belle to find her fortunes suddenly dim with the recent upheaval in the credit markets, which has choked off what was once cheap and plentiful debt, and spread pain across large swaths of the buyout landscape.

"Some of the helium is out of the balloon," says Colin Blaydon, director of Dartmouth's Center for Private Equity and Entrepreneurship. He adds that private equity buyers are "expressing a bit of remorse and looking to get out" of deals.

Although no one knows how many buyouts will actually fall apart, the trouble on the horizon is noteworthy. On Wednesday, for example, the homebuilder Levitt found its acquirer, BFC Financial, backing out.

Home Depot, after disclosing that its profit fell 14.8 percent in the second quarter, said that the sale of its HD Supply unit to another consortium was under threat. If the sale doesn't go through, Home Depot said its $22.5 billion stock repurchase plan would be sliced nearly in half.

The stocks of other companies in the middle of buyouts, such as Tribune Co., Hilton Hotels, and First Data Corporation are all trading at discounts to their buyout prices, signaling these deals could be in trouble as well.

Meanwhile, the mountains of debt created by what research firm Dealogic estimates was about $713 billion in global leveraged buyout volume this year, continues to hang over the market like overripe fruit.

Robert Polenberg, director of S&P Leveraged Commentary & Data, says the banks that underwrote the deals are still on the hook for $234 billion in loans. Since the banks either have to sell that debt at a deep discount or keep it-and its risks-on their books, this is holding up completed deals and backing up others about to be signed.

The deal flow isn't just slow, it's essentially stopped. Polenberg said there were only two deals in the first half of August.

Tishman Speyer Properties and Lehman Brothers Holdings delayed their $15.2 billion acquisition of Archstone-Smith Trust, saying that debt market conditions had made it too difficult to sell the $17 billion in debt needed to complete the deal.

Cerberus Capital ran into the same problem. To finalize its takeover of Chrysler, Cerberus and the seller, Daimler, had to shoulder $2 billion of the $12 billion loan that was slated to be sold to others. Again the reason was "highly volatile U.S. loan markets," according to DaimlerChrysler.

Of course there is a silver lining for some players. Many hedge funds and private equity firms are now trolling the credit markets, picking up debt on the cheap.

And in a perverse turn of events, the crisis has given some companies a new handle on their foes. TXU, a Texas utility, has been using the debt crisis to rally support for its private equity suitors, telling recalcitrant shareholders that bids are unlikely to get better given current market conditions.

Others have been given breathing room to accept offers when activist shareholders themselves switched course and decided to support the company's plans.

On Tuesday, Pershing Square Capital Management finally gave its blessing to a buyout of Ceridian, which processes payrolls, after fighting tooth and nail against it. Pershing grew concerned that deteriorating credit markets would make any higher offer unlikely and would jeopardize the offer on the table.  

But for many companies, the deteriorating credit conditions have closed the window on their ability to entertain any takeover at all. British software maker Civica, British cable operator Virgin Media, and Texas-based Nexstar Broadcasting Group, among others, have halted takeover talks or pulled themselves from the market.

At the same time, the credit crunch could doom some older targets now being digested by private equity firms, targets that may have stiff loan covenants or heavy variable-rate debt burdens.

"Probably not too many of these deals are going to implode in the next six to 12 months, but I think it is inevitable that some of them will have problems," says Edward Altman, director of the credit and debit markets research program at New York University's Stern School of Business. "In terms of those deals that are interest-rate sensitive or refinance sensitive, I think it will be sooner, rather than later."

It remains unclear whether the current crisis signals an end to the buyout boom, or whether even the shock of a highly-leveraged buyout defaulting could end the party.

 "So far, that shoe has not dropped," Blaydon notes. Both the Federal Reserve and the world's other central bankers have been increasing the money supply to keep it from doing so.

What is certain is that deals completed in the future will be different from some of the highly leveraged and pricey pursuits that led 2007. Buyers now will have to put more equity into deals or obtain lower purchase prices to get them done.

That means private equity groups will be pickier in choosing acquisitions, and, despite the recent swoon in the equity markets, stock prices may have to come down even further to garner much interest.

As George Roberts, the founder of Kohlberg Kravis Roberts & Co., told analysts on Wednesday, "Stock markets haven't fully reflected what's taken place in the credit markets."

None of this is inherently bad, says Jeanne Montague of Montague Partners, a San Francisco investment bank. It is likely to damp down the overheated prices being paid for some companies, she said.

Large corporate L.B.O.'s in the second quarter of 2007 had an average price of 10.6 times earnings before interest, taxes, depreciation, and amortization. Last year, the average was 8.5 times Ebitda.

"This is almost a 25 percent increase in the purchase price multiple, which is a dramatic change," she says. "I do not see any underlying factors in the health of either the U.S. or the global economy which can support those types of multiple increases in such a short period of time."

In the end, the credit lockup and the stock market swoon may be just what the doctor ordered to keep the L.B.O. deal alive for another day.