Have An Opinion About Private Equity? Here’s Mine.

Private equity firms and their investors can’t make money unless the businesses they are investing in get better. There is no way to exit or sell them to someone else at a higher value unless you have created something that is sustainable. And that somehow is lost in the current debate – the notion that all private equity is involved in asset stripping, and they are “vultures or vampires” leaving carcasses behind. Come on! There’s nothing further from reality. Wake up people.

Private equity tends to invest in businesses that are in some period of transition. Sometimes you can read those correctly, and in some cases you invest in a business that you think you can save and you can’t. But in the absence of private equity investment, in many cases, those companies go under much sooner, if not immediately! Then ALL the jobs are lost. So that shouldn’t be lost in this debate.

Employment in most private equity owned businesses is declining before the investment was even made. That’s why they’re there! And it continues that decline for a couple of years in some cases. So these are nuanced arguments, but all the more reason to resist the simplistic generalizations of private equity.