In 2011, the large health care and pharmaceutical company Johnson & Johnson (NYSE: JNJ) generated $ 13.9 billion in free cash flow and maintained its "AAA" credit rating.
 
The drug maker Pfizer (NYSE: PFE) had more than $ 29 billion of cash and short-term investments on its balance sheet as of October 2011.
 
The tech giant Oracle (Nasdaq: ORCL) had roughly $ 30 billion of cash and short-term investments on its balance sheet as of November 2011. In October 2011, computer company Dell (Nasdaq: DELL) was sitting on more than $ 13 billion of cash on its books.
 
Do I want to invest in these cash-rich companies?

Not particularly.

These large and mature bellwethers have to work hard to provide enough growth each year to budge their bottom lines. That's one reason they buy so many young, small companies that are at the beginning of their growth-spurts.
 
For instance, in the past few years, Johnson & Johnson bought a number of small, fast-growing companies, such as Peninsula Pharmaceuticals, Tibotec-Virco NV and Acclarent.

Meanwhile, Pfizer scooped up BioRexis Pharmaceutical Corp., FodRX Pharmaceuticals and Excaliard Pharmaceuticals. Oracle acquired Ksplice, Eneca Technologies and Sleepycat Software. And Dell picked up Ocarina Networks, Boomi and Force10 Networks.

All of this leads me to ask: Why should I buy slower-growing mega-companies if I can buy what they are buying?
 
There's a hitch of course. All of the small companies I listed above were privately-held companies — not publicly-traded on a stock exchange. But there is a workaround.
 
I may not be able to directly buy into small, privately-held companies — but I can invest in a company that does.
 
Business-development companies (BDCs) loan money to private companies. In return, BDCs get back interest and — in many cases — an equity stake in the companies they loan to. If one of the companies in its portfolio is acquired or goes public, then the BDC gets a piece of the action. By law, BDCs must distribute 90% of their earnings to shareholders. As a result, BDC's have very rich dividend yields.
 
There are a number of reasons I like BDCs right now:
 
1. The hunt for yield
The Federal Reserve intends to keep its interest rates near zero, potentially through 2014. This policy has resulted in record low interest rates on Treasuries. Investors dependent on income aren't finding much to love about a five-year Treasury yield of 0.7%. As a result, income investors are scrambling for better-yielding securities, increasing the demand for real-estate investment trusts (REITs) and BDCs.
 
2. Strong merger and acquisition environment
 In 2011, there were 10,241 merger and acquisition deals in the United States, worth a total of $ 1.03 trillion, up 15% from 2010. More than $ 219 billion of activity was generated by technology-related mergers, an increase of 17% compared with 2010.