…came the Illuminati then the Trilateral Commission and the claim do jour is that it’s all The Jooos. This is obviously passe and won;t prodyuce a bestseller and social position for an ambitious leftie writer. Therefore:
I’ve spent the last four years researching private equity, and during that time I’ve been blown away by both the sheer scale of its involvement in our lives, and by what it reveals about how power and wealth now operate. A clue lies in its name: private equity deals in companies that are private. Unlike publicly listed companies, private equity-owned firms publish as little as possible about their activities and accounts, making it hard to follow the money and see how your childcare fees are spent, or whether a company is loss-making or not.
“The light of day is the best disinfectant,” the supreme court judge and liberal reformer Louis Brandeis once said. When information disappears, so does effective scrutiny. As a style of ownership, private equity resembles the opposite of democracy. It concentrates power among a small group of exceptionally wealthy dealmakers who reap the benefits of society’s failure to hold them accountable. It’s no surprise that Republicans have been pushing for legislation that would strengthen this industry’s grip over the US economy.
Therefore it’s all private equity’s fault. 300 page chewing over of this iniquity coming to a book shop near you real soon.
Hettie O’Brien is a regular contributor to the Guardian Long Read, an assistant Opinion editor and the author of The Asset Class: How Private Equity Turned Capitalism Against Itself, published 9 April
See?
They still have to produce accounts and be liable for investigation by HMRC.
Private Equity is seen now as what in the old days we would call ‘asset strippers’. The difference being is that large banks eg Macquarie get involved and although their technique is still primitive, they are a bit too opaque to find out what is going on until they have done the damage and got out.
I’m quite content to let asset strippers strip. If there is surplus capital idle in a firm then it would be useful to deploy it more effectively elsewhere.
Likewise Macquarie. They did the heavy lifting financial engineering to get the London supersewer built. And Thames Water got it built at only a billion over budget. (Compare channel tunnel, HS2, etc.)
“Asset stripping” is also known as “weeding”. You get rid of what is strangling and drawing nourishment away from your delightful flowers, or vegetable patch.
Barely a year ago several Republican states sued Blackrock, Vanguard and State Street for climate activism and promotion of ESG (Nice well-established and successful company you’ve got here. Shame if something was to happen to it).
Obviously playing a very deep game. I look forward to Hettie’s follow-up which will doubtless shed light on these nefarious practices.
For wankers like O’Brien, private equity is ‘da Joos’.
Oh do fuck off love. Or should I be pleased that some lefty throbber is singing the praises of the stock market?
She’s from the Grauniad so it’ll be wrong, but PE does seem to have some form – buy a business, load it with debt, take out as much cash as they can , sell off whats left then get out before the shit hits the fan.
Hate to say it but there should be better regulation to stop them.
There’s thousands of PE deals every year but the media focuses on those which go wrong. If PE just destroyed value, it would not be profitable. If PE was just a simple “cut costs, load up with debt and get rid’ formula, why would anyone pay the PE firm’s margin?
The thing that all PE deals have in common is that they were freely entered into by the sellers of the business. Why does this need to be regulated?
Buying a company with loans taken out against its assets seems wrong to me somehow.
The usual form seems to be:
I assume that the initial buy is via loans taken out against the stock you own before the offer, though there’s probably a way to get around that.
It seems like a mafia “bustout”, but even less friendly. The mafia can’t really do that unless you take out a loan from them in the first place, at which point you’re stuck with them.
No, that is not how it works so you are arguing with your own immagination. Have you taken lessons from Spud?
(If nothing else: PEs don’t make money if they default on debt and those that do often will not find LPs or debt providers)
What’s the definition of “private equity”? Is it just companies that are not publicly listed with external investors? So, Dyson? A burger van in a layby on the Fosse Way with a silent partner?
‘Private equity’ is equity investments in private companies, generally those made via some sort of closed-ended fund operated by an external investment manager.
Technically, the silent partner in Fosse Way Burgers’n’Coffee is a PE investor too, but is not the sort that Hettie rails about. At least I don’t think so. She does write for the Graun, so she might think that sort of thing is also the cruel face of capitalism.
Chap I know worked for a company that was taken over in the early 90s by a Yank investment firm – they had spotted that pension loophole which meant they could take all the excess cash, so they came in, pinched the pension, and fucked off again. Not sure what to do about this other than removing the jobs and pensions from everyone involved in drafting and passing the original legislation.
I did my usual thing, Googled “Hettie O’Brien”, and was presented with a screenful of pictures of the prototypical Progressive young woman, albeit slightly prettier than most. The name itself could have told me that, mind. Hettie, FFS.
Why do I almost always end up getting my stereotypes reaffirms?
‘Stereotypes are largely true’ and ‘Higher IQ scores correlate strongly with better life outcomes’ are the only general truths to have emerged from what are called the “social sciences”.
MOST businesses are privately owned.
Commies have complained about corporations for decades. Now they’ve decided privately owned companies are bad, too.
Private Equity and Hedge Funds. More ignorance is displayed about these than one could possibly imagine.
They are closed-end investment vehicles seeking absolute returns – not relative – whose Limited Partners (General Partners are the people who work in them) have to be ‘Qualified Investors’ (a legislated level of free funds and “sophisticated”).
It’s not secret scary stuff.
For decades The Left has compared “public companies” to “private companies” – meaning, usually, government-owned companies to public companies.
How are they to explain suddenly using the term “private companies” accurately? Won’t their tiny brains burst? Or is it no problem, given that intellectual consistency is not a part of left wing opinion?
You forgot the Freemasons on your list. There was actually an Anti-Masonic Party in the early days of the US.
private equity resembles the opposite of democracy.
So the equity in your house and your pension should be open for examination by all and sundry?
NO, only by the Grauniad and it’s acolytes (their personal wealth is exempt from scrutiny)
“Unlike publicly listed companies”
Is Hettie getting confused with PLC – ie Public Limited Company which is listed on the stock market.
“…private equity-owned firms publish as little as possible about their activities and accounts,”
Private Limited Companies – that’s about 99% of companies in the UK usually don’t publish anything about their activities except by way of advertising perhaps, and very little account information except a simple set of audited accounts required by Company Law.
The taxing authorities get their annual filings and should they wish to audit they can get a good look at detailed internal accounts. The complaint seems to be that the media doesn’t also get that access.