Private equity is key

It’s nonsense to claim private equity has ‘brought some of our finest companies to their knees’. What it does is repair broken companies ­- businesses as different as EMI, Travelodge and Pizza Express – that have lost direction or grown flabby. Private equity has a fine record of turning round companies’ fortunes. Many independent studies show that big businesses owned by buy-out houses perform much better than their quoted peers.

That is because private equity takes a long-term view. Owners have ‘skin in the game’.

Buy-out houses make money only when the businesses they buy are sold and actual cash is returned to their investors – often pension funds and the pensioners who depend on them.

In a world where banks have stopped lending, private equity is one of the few sources of long-term capital around, offers a solution to today’s problems and has a crucial role to play in helping our economy recover.

Simon Walker
Chief Executive
BVCA-The British Private Equity and Venture Capital Association