Private equity vultures
Posted on February 12, 2007 by Richard Beddard
Filed Under Investing |
Peter Linthwaite, chief executive of the British Venture Capital Association, defended private equity on Radio 5’s Weekend Business programme last night (NB: this link may not work after next Sunday’s show). He says private equity funds aren’t asset strippers, the whole point of them is to create a better business and sell it on.
Unions, and the Sun newspaper disagree. I’m sceptical too, though not necessarily for the same reason. When a private equity firm buys a company on the cheap, often they deprive existing private investors of the opportunity to participate in a recovery they’d identified. It happened to me with Debenhams. Far from being saviours I reckon, often as not, companies recover and the buy-out merchants just want all the loot for themselves. 
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[...] I have my doubts too. Next week I’m talking to Guy Fraser-Sampson, author of Private Equity as an Asset Class. Hopefully he can lay the industry bare for us. [...]