Private Equity.... What is so bad about them??

By Andres D’Alessandro C.

Everywhere I read something about private equity firms it is always something negative. And I don’t really understand why. Yes, private equity firms do tend to cause massive layoffs when they take over a company. But that is only in companies that have way too many employees to begin with. I like to think of private equity as a kind of financial doctor. They come in fix up a company or make it profitable in whatever way be necessary and then sell it. Now I admit, I am being a little naïve, a lot of these private equity firms just borrow massive amounts of money, pay themselves huge dividends, and then sell a worse off company. But sometimes, just sometimes, they really do the right thing. It all depends on how you look at it I guess.

I personally, as you may have noticed, am completely for private equity. I believe to be the purest form of capitalism. They make companies that are not running at their best improve themselves. You see it all around the world, huge corporations shaping up because they are afraid of being taken over. That is a really positive effect they have on companies. I guess, you could say private equity is capitalism’s way of taking out the weakest competitors out there. And in way where every country is obsessed with economic growth and economic growth is dependent on how well companies within that country are doing, than shouldn’t private equity firms be praised and not booed.

But that is just one man’s opinion.