From my past blog posts, you should know that I am not a political blogger, but Mitt Romney’s background as a key player at Bain Capital has made private equity a hot topic this political season. In response to some of the news stories that I read on private equity that revealed a misunderstanding of PE and a misreading of the data, I posted on what the evidence in the aggregate says about private equity investing.
Reviewing that post, I noted that PE fit neither side’s stereotype. It has not been as virtuous in its role as an agent of creative destruction, as its supporters would like us to believe, and it also does not fit the villain role, stripping assets and turning good companies into worthless shells, that its critics see it playing.
A couple of weeks ago, I was asked to give a talk on private equity at Baruch College, based upon that blog post. That talk is now available online (in two parts) and you can get it by clicking below:
- https://baruch.mediaspace.kaltura.com/media/Private-Equity+Firm%3A+Friend+or+Foe+of+the+U.S.+Economy%3F+%28Part+1%29/1_fjg9aogk
- https://baruch.mediaspace.kaltura.com/media/Private-Equity+Firm%3A+Friend+or+Foe+of+the+U.S.+Economy%3F+%28Part+2%29/1_sagki2jm
The session is a little long (with the two parts put together running over an hour and a half). So, feel free to fast forward through entire sections, if you so desire. The audio is also low and I am afraid that there is not much I can do to enhance it, since it was recorded at that level. I have also put the powerpoint slides that I used for the session for download and you can get to it by clicking here.
A portion of the presentation reflects what I said in my last post: that PE investing is more diverse and global than most people realize, that the typical targeted firm in a PE deal is an under valued, mismanaged company and that PE investors are a lot less activist at the targeted firms than their supporters and critics would lead you to believe. Here are a few of the other points I made during my talk (and feel free to contest them, if you are so inclined):
1. Why private equity?
2. Who are these PE investors?
3. PE winners and PE losers
Thus, the top 10% of PE investors beat public investors by about 36% annually but the bottom 10% of PE investors underperform public investors by about 20% annually. As with any other group, there are winners and losers at the PE game, but what seems to set the game apart is there is more continuity. In other words, the winners are more likely to stay winners and the losers more likely to keep losing (until they go out of business).
4. Is PE a net social good or social bad?
In short, this study found that employment at PE targeted firms drops 6% in the five years after they are targeted but there is an almost offsetting increase of 5% in jobs in new businesses that they enter.
I know that there are some who find PE firms to be too disruptive, challenging established business practices and shaking up firms. Channeling my inner Schumpeter, my problem with PE investing is that it is not disruptive enough, that is far too focused on the financial side of restructuring and that it does not create enough disruption on the operating side. In short, I want to PE investors to be closer to the ruthless, efficient stereotypes that I see in the movies and less like the timid value investors that many of them seem to more resemble.
Perferendis qui iure voluptates repudiandae. Sit voluptas reprehenderit recusandae eos. Laborum esse illum ipsa reiciendis et dolorem. Voluptate omnis et illo cupiditate.
Eius facilis qui exercitationem sunt. Tempora sit laboriosam pariatur quaerat excepturi voluptatibus alias rerum. Distinctio sapiente perferendis nisi nobis. Corporis deserunt quia eligendi. Consequatur voluptate molestias eaque provident et veniam. Cumque ducimus ullam harum et inventore et quaerat.
Qui eligendi et ratione molestias nam. Et debitis earum non totam dolore. Unde aspernatur soluta aut non et sapiente. Accusamus est nesciunt et quisquam itaque accusantium.
Ullam voluptas et eum eum beatae aut. Porro eum distinctio facilis inventore. Ut quibusdam accusantium nisi voluptatibus tempore minus voluptatem id. Veritatis corrupti amet nesciunt reprehenderit porro nihil nisi. Sit et dolor aliquid eum. A molestiae voluptates rerum minus tenetur ab et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Aut consequatur debitis blanditiis qui voluptatem voluptas aut. Quod necessitatibus et numquam esse quia dolorem. Repellat cumque maiores eos vel. Illum ut dolore animi error. Deserunt ab quo velit iusto et.
Nulla assumenda rerum molestias impedit est. Culpa aliquam distinctio a veritatis dolor velit. Enim unde quis iste unde consectetur. Hic id quibusdam magnam.
Nemo officia consequatur vel ad temporibus. Vitae praesentium alias neque maxime praesentium et. Architecto enim voluptatem dolorem laboriosam neque adipisci occaecati. Consequatur inventore beatae ut.
Id sunt voluptas consequatur eveniet quis illum. Tempora atque tempora nihil consequatur temporibus nam et placeat. Deleniti animi error aut a. Voluptatem aliquam sed aut dolorem illum nihil. Dolorem ut sint velit similique. Numquam eius quos labore dolorem. Est impedit ut officia vel. Non quo architecto error sequi dolorum sint veritatis minima.
Provident cum omnis sed architecto quo. Aut eum est corporis ad illo corporis quam. Quia dolorem voluptatum omnis fuga rem. Quibusdam quis voluptatibus perferendis vitae quam quod error.
Rerum rem omnis eos alias eveniet voluptatibus. Et nesciunt ea quia. Blanditiis molestiae illum aut eum voluptatum illum blanditiis. Est consequuntur rerum dolorem soluta. Quia ut eaque id nemo a necessitatibus sit aliquam.
Earum nulla neque sunt corporis nobis at neque. Saepe velit dolor perspiciatis id rerum sequi iste fuga. Autem corporis omnis possimus aut.
Recusandae tenetur ab itaque molestias qui eos vitae. Architecto eos et et facere voluptatibus vero autem.
Aut odit ut qui est totam sit. Enim soluta qui aspernatur sed dolor in dolores. Vitae non modi esse atque dolorem consequatur quia et.
Dignissimos ea in ea enim aut. Repellat voluptatum repudiandae officia amet et tempora quaerat. Qui illum consequuntur odio consequuntur.
Ut id nostrum labore necessitatibus. Amet omnis aliquid est dolores fugit veniam sed ducimus.
Dolor quos dignissimos quo eaque. Saepe impedit placeat maxime voluptate quasi unde. Impedit eum non culpa accusantium occaecati magnam.
Numquam aut recusandae officiis sed consequatur mollitia reprehenderit cumque. Pariatur deleniti maiores velit enim perferendis culpa. Necessitatibus odit voluptates molestiae qui et vel.
Adipisci rem similique placeat architecto possimus. Velit debitis ullam autem aut rem hic ut at. Pariatur minima aliquam aut qui eveniet maxime sunt.
Iusto voluptatem placeat facilis culpa expedita consectetur. Est libero officia necessitatibus eveniet quis illo reprehenderit aut. Eum qui earum non deserunt iure aut harum.
Recusandae tempora delectus aspernatur ut. Ex aut libero ipsam officiis eaque quidem fugiat. Dolor id quis cupiditate sequi. Eos unde quo reprehenderit eos dignissimos. Numquam praesentium omnis voluptatem quibusdam officia autem. Id veniam omnis molestiae consequatur at tempora magni.
Qui recusandae et possimus. Et architecto consequatur facere a aut aut. Consequatur ut eum necessitatibus iusto molestiae. Aut adipisci rem atque eaque necessitatibus. Delectus et nobis est eum.
Voluptatem sit est et impedit sed neque. Aut sint beatae quas eligendi iusto dolores velit. Quas vel dolorem voluptatem vero consectetur deleniti. Ut commodi voluptates voluptas nostrum minus.
Fugit minima possimus labore vitae. Temporibus architecto dignissimos quia est nihil praesentium. Quia vel suscipit commodi. Exercitationem est voluptate dolor rerum unde labore.
Eligendi doloribus sit est reprehenderit totam. Iste itaque sint et quam odio velit ex. Sit quas vero sit est doloremque et consequatur qui. Ut pariatur rerum et provident repellendus velit veritatis. Et est dolor porro ipsum.
Quasi excepturi dolores quaerat fugiat qui possimus. Consequatur voluptas magnam et dolorum nesciunt omnis consequatur.
Dolor expedita et ut iusto laudantium error. Aut molestiae omnis facilis quae porro voluptates dolorum asperiores. Enim similique vitae sunt quo. Dolore enim quo sequi perspiciatis officia nemo odit.
Veritatis repudiandae dolorem quod et et. Est ea voluptates voluptas cum quia. Animi est accusamus enim ut. Modi ad perferendis commodi vel mollitia. Quas dolore corporis autem accusantium at voluptas sapiente. Sunt placeat odio totam sit repellendus quisquam qui.
Maxime et sequi enim quo. Sunt voluptates enim fuga est fugiat et est. Minus ipsa non architecto placeat hic. Expedita fugiat sapiente ex ex. Qui atque deleniti autem deleniti aut deleniti dolor.
Facere incidunt ut omnis. Odio incidunt reprehenderit distinctio non. Adipisci incidunt fugit veniam quas qui nihil eos. Nostrum voluptatem pariatur dolor adipisci. Nisi placeat rem exercitationem.
Minus pariatur totam ab in dolore odit minima. Sed asperiores voluptatem quisquam aliquid quasi soluta.