Private equity - friend or foe?
The topic of private equity firms and their role in the economy became increasingly popular during the past few months, particularly in the US. The subject became the main point of discussion due to its linkage to a certain American presidential candidate and to some extent due to the rising importance of the inequality debate and high unemployment in America. The private equity industry is depicted as one the main 'evils' of capitalism. No matter how absurdly this sounds, the people and the media were concerned that the existence of private equity firms can only harm the productive business environment. They are pictured as corporate raiders who "ride on the backs of businesses, ripping them off and earning a profit on their misfortune". The second main criticism is that their executives receive too much money (and don't pay enough taxes). ( FYI, in the movie "Pretty Women", Richard Gere portrayed a typical private equity executive - just so you might ...