How To Succeed in Business Without Adding Value - In These Times
Appelbaum also finds that when private equity firms take over, they do not create jobs faster than comparable businesses, but they do destroy jobs faster. (So much for “job creation.”) Meanwhile, Shaxson reports that a Bain internal study concluded that there is “little evidence that private equity owners, overall, added value” to the companies they took over.
All this means that even when a private equity firm “succeeds” (usually after buying an above-average business), much of their gains are reaped simply by transferring large amounts of wealth to themselves. The losers are usually the companies they acquire, their investor partners, taxpayers, government agencies and workers–ultimately, the entire economy.