大象传媒

What will this mean to the Compnay investment market? If these private equity firms do not sell on then there will be no new money for business startups that are risky to take on. Will the government owned banks pick up the slack? Should they?

Robert, what did you mean by this in York during the Q&A after you Ebor lecture?

Q: "If you were the next Chancellor of the Exchequer, what would be your first, your very first, practical action?"


A: "If I answer that, I'll be fired by the 大象传媒."

hat tip; conhome

Chickens
Home
Roost

bubble masters sitting on a burst bubble.

Ah. So the market needs confidence.
But actually it is more like a game of Mornington Crescent.
The players clearly think the time is not right for the home run.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

I imagine most people won't shed too many tears for Private Equity companies suddenly becoming unable to make magic multiples on the investments.

Mainly because Private Equity firms take money only from people too rich to know what to do with it to buy things which they then try and sell to people managing ordinary people's money----at the best possible price---or is that 'the worst possible price' .

The decisions (to pull the offers) are interesting because Private Equity never ever takes a long or medium term view on any investment.

They always take a very short term view, but one they often mistake for 'long term', because they are disposed by their nature to be constantly ready to postpone the resolution planned ,at short notice, and to continue to repeatedly postpone for a long time.

So it often looks as if they are taking a long term view, and they often describe themselves as doing so.

This is partly because in the short history of 'pure' Private Equity as we now know it, there has been little downside risk in doing this.....

It's a bit like a conveyor belt of consumer goods, such as the one on the Golden shot; but from which you are allowed to grab only one prize.

There is an urge to take each item as it appears, but at the same time,this is coupled with the knowledge that the next item may be more valuable.

So waiting is less risky than snatching an item quickly, despite the fact that you never quite know what the next item will be.

Of course eventually you do snatch an item--and should the next one be less valuable you (if a Private Equity Company) point to it and send a 'report to investors' highlighting the increased value you secured for them by your 'timing'.

If the next item is MORE valuable you ignore it completely and simply descibe the intrinsic desirability and value of the object you DID yank off the belt.

For Private Equity this has been (sort of) the case up to now--- and in a way 'now' means somewhere around mid 2007-------but in the present 'now' (2 and a half years later)after many postponements of prize grabbing, the question they are having to begin to face up to is deciding whether the person putting prizes on the conveyor belt has temporarily stopped doing so..... or the whether he's dead and so nothing will be put on again.

At least for now the belt itself hasn't broken and stopped.

Well.... if you have investments in private equity company management you'd better hope the workman sticking the prizes on is just having a comfort break, otherwise it's probably going to be down to finding out exactly how good your fund managers actually are at managing these companies in the old fashioned way---and getting your investment back not in lovely heaps of Gold coin in one go...but in little parcels of Dividend, from here to eternity.

Private Equity Masters of the Universe reduced to selling blouses, cheap hols and cleaning out the loos at the Gym...no wonder there may be tearful Private Equity partners......

#1 boabycat

Private Equity companies don't invest in start-ups, spin-outs or early stage companies and don't actually create anything new because they are generally run by people who can read a balance sheet but don't understand markets or technology.

In short they are about as socially and economically useless as hedge funds.

7. e2toe4

You speak very assertively about the way PE works. Would you care to tell us what you do in life? I'll happily tell you what I do. I advise a range of investment organisations on their operations, including their investment processes. I have venture capital/PE firms within my client base. None operate in the way you describe. So, if you are in the VC/PE space, and have a quirky way of making money by "pumping and dumping" such holdings, I'd love to chat to you, as we might both make some money out of it. Unfortunately, I rather doubt it would work, just as I rather doubt you have the faintest notion of how this industry works.

#8

PE (more accurately VC) firms do invest in early stage enterprises. Rarely in total start ups it is true, but that is as much to do with total start ups not wanting them, as they not wanting total start ups.

You'd be surprised at just what VC/PE does support. You're correct that most VC/PE staff are very finance-savvy, but they also have great scientific knowledge. PE firms tend to concentrate on specialisms (pharma, life sciences, green energy etc) and hire specialists. Alternatively, or as well as, they will hire scientific experts to help with due diligence on possible investments to determine if they are viable.

It is easy to dismiss VC/PE firms as some kind or parasite, but do keep in mind that they don't struggle to find companies in which to invest. Most of their investee companies approach them and ask for investment. They don't spend too much time trawling for ways to invest their clients' money. Nor is every VC/PE company overloaded with debt. Many have no debt. Nobody will lend to them. I know of several PE investments that have been bought, and subsequently sold, without ever having borrowed a penny, or indeed ever making a profit. One of the key virtues of VC/PE is the willingness to back new processes or discoveries (eg new drugs), take them to the state when they can begin to produce (and hence generate revenue), and then sell them. They can be loss-making throughout the period that they have VC/PE shareholders.

#9 & #10

Unfortunately your defense of the PE/VC industry will fall on deaf ears owing to the well-documented and reported cases in the UK where PE has shown contempt for the ongoing wellbeing of the companies they have invested in, and gloried in all the worst characteristics of leveraged buyout, asset-stripping, workforce-abusing parasitical and predatory late capitalism.

I accept that the VC industry has done some good particularly in the Tech and Pharma segments, in fact have been a fundamental part of those industries' development.

Frankly I'm just glad the pension firms have finally wised up to selling cheap then buying back expensively. And I'd be more than happy to see company owners that are actually invested in the companies for a longer time.

#9 & #10

PE companies are not VCs. Best example of this is 3i which publically declared it's transformation from a VC to a PE company.

11. shannyla wrote:

"And I'd be more than happy to see company owners that are actually invested in the companies for a longer time."

VC/PE exit strategies are driven as much by the owner-managers as by the VC/PE investors. Remember that a "typical" VC/PE investor will be a minority (though a significant one), and the owner-managers will normally constitute the majority shareholders. That way the VC/PE investor knows that their interests are aligned. The owner-managers typically want to realise at least part of their investment over a reasonable timeframe, say 3-5 years. Many such people are serial inventors. They come up with an idea, develop it, then sell their firm on (hopefully at a profit). Then they invent something else. A lot of them are dreadful at managing businesses. It is common for VC/PE firms to have to add management talent to late-stage investments to make them saleable, as the managerial talents of their starters are so poor. You really would not want a lot of them to stick around too long, not if you're an employee of their firms anyway.

# 12

Define VC and PE then.

I'm shocked.

When you say:

"It's just that the big pension funds, insurers and other institutions that look after our money seem to have wised up that if private equity is selling, it isn't as an act of philanthropy".

surely you're not suggesting that the institutional investors in the City of London, who are handling the nations savings are actually starting to do their job properly?

I'd be very sceptical about this.

They are one of the fundamental reasons why people in the UK get such rubbish returns from saving - that is to say pensions, assurance policies, investment trust, unit trusts etc etc.

It's three things really:
1. the ultra high charges that via their cartel scheme they manage to set for everyone
2. the endemic short-termism that presumably results from management performance targets (and bonus schemes?)
3. the belief (always present in those industries attempting to conspire together to increase prices) that the more complex one makes the product then the less the customer will understand it and be able to compare it with another.

Glad to hear these PE guys are going to have to wait a little longer to get their money back, Robert, but a big issue is how these institutions are operating - please investigate further.

The people who built up these companies were fantastic bargain spotters and geniuses at anticipating trends who knew their businesses inside out .
When it's left to a transplanted committee or a board it doesn't really work, does it?
Sell'em back to the founders!

Oh dear. A more one-eyed and ignorant piece on private equity it is hard to imagine. Travelport, New Look and Merlin will all be fantastic deals for their owners notwithstanding that the quoted exit route may be temporarily closed. They are all businesses that have grown revenue, profits and employment vastly under private equity ownership. They, like many private equity backed businesses, have prospered through the credit crunch and this is something to be admired not derided. As for the implication that the poor old pension funds were somehow cheated in the whole process, only New Look was previously quoted. And guess who are the biggest investors in private equity funds. Yes, pension funds. Derrh.

17. morebalanceplease wrote:
"They are all businesses that have grown revenue, profits and employment vastly under private equity ownership. "

Really...and how much did the PE owners borrow (at very low rates and obscene tax breaks on their profits) in order for these companies to 'grow revenue, profits and employment'?

Any company can 'grow' if they, or their PE backers, are leveraged to the hilt. Can't we just have companies that 'grow' on what they actually sell for once?

' It's just that the big pension funds, insurers and other institutions that look after our money seem to have wised up that if private equity is selling, it isn't as an act of philanthropy'

PMSL

So they are going to hold on to their cash,and increase it by doing a bit of selling of their own.
Wasn't that cash supposed to end up helping small businesses ?

Someone's already blogged that the management of Pension Funds will be the next phase of the crunch. It's not far off.

Look at the AA/Saga saga, for instance: both successful, highly respected companies with motivated workforces, reasonable profits and adequate shareholder returns - no debt and some property assets.

In come the PE 'cavalry' - a relatively small amount of their own money, leveraged up to billions with low-interest borrowing, shift that debt on to the company, sell the assets, retire gracefully.

PE 'investors' make hundreds of millions profit (didn't one individual make over 拢50m?), taxed at 10%.

AA/Saga left with 9bn debt to service.

Nice work!

Are you telling us, Robert, that it has taken the pension funds this long to work out that companies floated on the Stock Exchange are puffed up by their promoters?

If that is the case then the fund managers need to be taken out and shot even more than before.

The trouble is that being able to read a balance sheet does not tell you what is going on underneath within the business. This only comes from experience. How experienced are the fund managers? Are they just children recruited on fancy salaries from so-called top universities? If that is the case then I suppose the game is called Liar's Poker.

Anyone who thinks PE firms are invested in only by wealthy individuals is wrong. In order to be confident of being able to draw money down from investors on demand, PE funds need investors who are reliable and have readily accessible cash. Namely pension funds and insurance companies.

So if you think that the demise of PE is a good thing....think again - it's your money.

Lets start with some obvious points:

1) Who are some of the biggest investors in PE/VC - the pensions funds

2) There is virtually no benefit to a VC/PE in taking on a well managed business that is operating at the limit of its capacity with no way of growing. What they take on is the sleepy company, the badly run companies, the companies lost in a big corporate group, the company that can be added to another business and the company that is just taking its shareholders for a ride. Of course they do not always get it right but overall UK business would be a lot poorer and worse run without them.

I have been involved in a lot of leveraged buyouts over the years, some have been successful and some not but every last one started from the assumption that the underlying business could with a change of owner, some new management and much stricter cash controls be grown considerably - and yes as a result the new owners would make a lot of money. PE/VC houses do not sack workers, for example, and asset strip unless there is a good reason - sadly the reason is often that the widget (or whatever it is) can be made quicker, cheaper and in greater quantities outside of the UK

#14 Jaypee

Sure..... A VC is an investor that will fund either on its own or with others a start-up, spin-out or other pre-revenue company so taking on a high level of risk usually but not always using it's own funds. As in the case of Silicon Valley the American VCs and Banks essentially enabled the creation of an entire global industry. Sadly for the UK US VCs have always been bigger risk takers and more visionary than UK VCs and certainly have a better understanding of markets and technologies.

A PE company rarely invests in anything other than existing companies and tends to borrow the funds it needs from the banks. It makes its money by selling on, floating or refloating the company at a later stage. It often but not always improves company performance by reducing costs which can include scrapping R&D projects and programmes to provide short term improvements to the balance sheet.

The strategically important difference is that PE companie don't create anything much that's new whereas VCs do or certainly used to although that role now seems to be being passed on more and more to so called Angel investor groups.

23. Justin150 wrote:
"PE/VC houses do not sack workers, for example, and asset strip unless there is a good reason - sadly the reason is often that the widget (or whatever it is) can be made quicker, cheaper and in greater quantities outside of the UK"

So the overriding motivation in life -and PE/VC houses in particular - is not to make enough money to live, or to make enough money to live comfortably, or to make enough money to live well, or even very well, but to do whatever is necessary to make the absolute most possible money - even if that means making hard working, dedicated and loyal employees and their families homeless and destitute.

Is that what we have become as a society, and Justin150, if that is your motivation I'm very glad I don't know you?

Someone (Thomas Jefferson, I think?) once wrote that the price of freedom is eternal vigilance. This has proved itself so true again today when Goldman Sachs has been shown up as using one of its corporate computer servers to fiddle the result of a No10 poll on the Tobin Tax.

Another one (On 大象传媒 News Channel) today argued that it is a good thing that the UK is outside the Euro because sterling could depreciate so easily. Hang on a minute, this depreciation made us all poorer - but not the banker who said it of course, because he has just stolen our money to keep himself a wash in bonuses which by the way have gone UP since 2008 while we all get poorer.

These bankers will do anything, legal or illegal to maintain their dominance and our servitude - we need to stop this. Chuck out the bankers, or at least make them pay a heavy price for ruining our Nation (and the World)!

(Also note the funds that are provided to Private Equity come from a multiple of our savings and pension funds to put us out of a job! - by, you guessed it, bankers.)

'It's just that the big pension funds, insurers and other institutions that look after our money seem to have wised up that if private equity is selling, it isn't as an act of philanthropy'

I am curious to know who it is (outside of the charitable sector) who does sells things 鈥榓s an act of philanthropy鈥�.

If the implication is that the pension funds etc did not bother to do their own analysis of the value of what was being offered for sale, then that is surely a criticism of the pension funds, not of PE firms.

If the implication is that the pension funds etc themselves sell things 鈥榓s an act of philanthropy鈥� then again, I鈥檇 say that鈥檚 a criticism of the pensions funds.

In defence of Justin_150 and Jaypee...

PE and VC companies don't invest in relatively safe investments like gilts, AAA rated bonds and FTSE 100 companies. That is the role of standard fund managers.

They invest in small companies with the potential to grow into bigger ones, which is something standard investment funds won't do because there is no certain return on investment. Without this investment jobs aren't created and the local economy does not grow.

Not all the small companies make it into bigger ones so the investments can be lost. So to reflect that risk a significant risk premium needs to be applied. This means that PE return criteria are much higher than those of standard investment funds. In short, PE funds need to make aggressive returns on investments because a lot of the companies invested in don't cut the grade in the end.

Furthermore, pension funds rely on PE for an alternative source of returns to balance their weighting in stock, bonds, gilts and commercial property. So unless the people on this blog who are PE's detractors haven't paid a penny into a pension scheme in their lives, your future financial stability is reliant on the success (in part) of PE funds.

And on a final note, if you think that PE is morally hazardous, lets use a very appropriate example. Kraft, owned by pension and investment funds, buys Cadbury. As a sweetener to the staff, they promise to keep a factory in Keynsham open which was going to be shut down and production moved to Polska. Of course within days they renege on their promise. What's the difference morally between PE and standard investment funds in that case?

CHEATS TRUE TO FORM!

Goldman Sachs faces 'Robin Hood tax' vote-rigging claims

There must be money still in this racket, KKR have just paid over the odds for 'Pets at home'. They paid 拢955 million, that's a lot of goldfish to sell if they are going to make a profit.

Makes you wonder who lent the money to KKR ?

28. Mike D wrote:

"So unless the people on this blog who are PE's detractors haven't paid a penny into a pension scheme in their lives, your future financial stability is reliant on the success (in part) of PE funds."

You are taking the proverbial, aren't you? I've invested in a pension scheme for over 25 years. Despite the fund managers during that time seeming to be able to generate large fees for themselves none of it seems to have found its way into my pension. I wonder why that is?

30 - pets at home is a massive UK success story in terms of growth, profitable store role out, retail location selection and market capture. It is currently cash rich with a very profitable business model in a massive market (seriously, do some research into the UK pet market - we spend a massive amount on our furry friends). The value does seem high but is based on multiples of earnings and future growth - in other words - they plan to open more stores, create more jobs and generate more taxable revenues - so that is a bad thing in this current economic climate??? Also, this board is awash with people saying bankers/PE/VC's get all these unjust rewards and then you pick on the entrepreneur who built up this business and took it as far as he could for cashing in on his success?

Fat Cat, maybe you're using the wrong pension provider.

16. At 01:41am on 12 Feb 2010, onward-ho wrote:
The people who built up these companies were fantastic bargain spotters and geniuses at anticipating trends who knew their businesses inside out .
When it's left to a transplanted committee or a board it doesn't really work, does it?
Sell'em back to the founders!

Well onwardho I agree with you, how about that.

And my next comment is this:

Mr Peton wrote:
'It's just that the big pension funds, insurers and other institutions that look after our money seem to have wised up that if private equity is selling, it isn't as an act of philanthropy'

Given these people are supposed to be experts, its taken them an awfully long time to 'wise up' hasn't it.

Fatcat, 18&20

I'm afraid you have fallen for the (union/大象传媒) anti-private equity propaganda on Acromas (AA/Saga). It's debts (excluding shareholder loans = equity), are most certainly not 拢9bn. They publish their results online if you can be bothered to look.

You say:
"Can't we just have companies that 'grow' on what they actually sell for once?"

"What they actually sell" = revenue.

Check out the revenue growth rates of Travelport, Merlin, New Look and Acromas under private equity ownership. Startling. As is the growth in employment within those businesses.

I wish you, like Robert, would do a bit more homework before posting. If you want to find out a bit more about private equity try the BVCA website. Plenty of propaganda there too, I know, but some interesting stuff too.

The proliferation of PE has in part reflected an uneven playing field where the taxation of returns on capital is concerned - interest expense is tax-deductible but dividends are not. This encourages debt - the last thing we need more of - and discourages equity.

It's quite likely that tax relief on interest will be scrapped or phased out - George Osborne has talked about this. So where will PE companies be if their annual net-of-tax cost of debt service increases massively?

The terms 'up', 'creek', 'without' and 'paddle' come to mind.

No wonder investors are in no hurry to buy from them.....

Re: Horned devil 32

I was not having a go at pets at home or our 'furry friends'. But I do find it difficult to work out why these companies sell out to PE companies if they are doing so well. 'I have a goose that lays a golden egg..quick let's sell it !'

Firms Like KKR, do pay well over the going rates for successful companies, but in do doing so, they have to destroy the uniqueness of these business's to make their fast bucks and show a profit.

The private equity companies seem to act like cancers gobbling up all the good cells.

Friendlycard, if you believe that PE is dependent on tax relief on debt to make their returns you are sadly mistaken. There are already rules and limits on tax deductability on shareholder debt and Osborne won't scrap it on "normal debt" - imagine the outcry from quoted companies and others with debt. Even if he did that would not put PE out of business. It did not stop investors (KKR) buying Pets at Home and I shouldn't be surprised if one or more of Travelport, Merlin and New Look go the same way. Quoted fund managers have every right to be picky and price sensitive, but if they are acting out of principle and chippy spite it just means more and more great companies will stay in private equity ownership. Quoted fund managers would die for the long term track records of their PE counterparts.

Yet another doom and gloom take on the world by Robert Peston, he and reports like him helpped to keep this country in recession for longer than needed due to their dower take on life. Its about time reporters started to report some more up beat news and encourge us to be more positive about the country rather than always looking on the negative side of life!!

> So the private equity firms are hanging on to their assets, in the hope
> that what's called the tone of markets improves over the coming months.

Sadly for them, there apears to be a global shortage of irrational
exuberance. So every cloud really does have a silver lining.

#28

"They invest in small companies with the potential to grow into bigger ones"

PE companies don't do this. They only invest - buy up - companies that they believe they can add more balance sheet value to by doing as little as possible. They're not interested in growth only in return.

Great blog (snigger).

The way that you report about PE companies using leverage to boost returns you would think that they are the only ones. In reality most companies have geared themselves to the max by binging on cheap credit for the last decade. This has obviously caused difficulties for companies as the economy has gone pear (w?) shaped.

You attack PE companies for buying companies cheaply and selling them at a profit. How terrible? The reason companies are cheap, is because they are poorly run. And yes, when the companies have been made more efficient, they are a more attractive proposition, and hence the shares will tend to become more expensive. Property renovators are not villified for sprucing up dilapidated houses and selling them on for a profit so why should PE companies.

As for 'sniggering' over any company's misfortune. This certainly is NOT becoming from the 大象传媒 business editor. Perhaps you should be referred to as the anti-business editor.

#24 wee-scamp

Erm, wrong on just about every count. There are some generally accepted definitions of venture captital and private equity, Those below are coutesy of The Encyclopedia of Private Equity and Venture Capital (www.vcexperts.com).

"Private equity is a term used to broadly group funds and investment companies that provide capital on a negotiated basis generally to private businesses. This category of firms is a superset that includes venture capital, buyout/leveraged buyout (LBO), and mezzanine and expansion funds. The industry expertise, amount invested, transaction structure preference, and return expectations vary according to the mission of each."

"Venture Capitalist - A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises, usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide both funding and varying degrees of managerial and technical expertise.

Two things to note. Firstly, venture capital is a subset of the wider private equity set. Secondly, VC and PE may both use debt as well as equity to finance their investments. There again, they may not. What differentiates VC/PE firms from traditional fund managers (eg in quoted equities/bonds) is that they tend to have a large part of their own wealth tied up in the Funds that they run. Thus their interests are far more closely aligned with their clients than is typical in traditional fund management businesses.

The typical VC/PE structure is some kind of commingled fund, usually a trust with a limited life, ie it has to be wound up after 8-10 years. The bulk of cash flow into these funds comes from large institutional investors, such as pension schemes and endowments. You may be surprised to know that some of the keenest investors in PE Funds are science-focussed UK Universities' endowment funds, aiming to match their own leading edge scientific research with those capable of bringing them to commercial fruition. I know of one such UK institution which has GBP100 million allocated to this activity.

A further general point on all this. You get the impression from RP's piece that the pulling of these PE floatations is some kind of problem or crisis for the PE houses. It isn't. They had their crisis along with everyone else in 2008/2009. They had Funds that were approaching the end of their mandated life, but all their normal exit routes were closed. Listing was out of the question. Nobody was buying any equity at all, certainly not small- or mid-cap companies which is what most PE floatations represent. The secondary market was dead, ie newer PE Funds buying investments from more mature (and close to their maturity date)ones. In fact the flow of funds into PE had virtually stopped, so it was also impossible to structure newer "vintage" Funds internally to buyout the older ones. Finally, trade sales were very difficult. Most companies were hoarding cash, not investing in new subsidiaries.

So the pulling of a few floatations now is pretty much a non-event. There are plenty of options open to PE houses about what to do with these companies. Most, I suspect, will simply float 6-12 months after their planned date.

#25 how about joining the real world - all major companies and most not so major companies are run to maximise profit/shareholder value, in fact you might want to check out the UK Companies Act and you will find the overriding duty of the directors is to do so.

All you doing is your version of the ill researched blitherings of various union leaders (and various EU politicians) - how disgraceful that these PE houses (who are probably nothing more than a bunch of wide boys and definitely did not go to the "right" school) come along and buy "our" companies and make the company's assets work harder.

If you want a version of economics where all companies are not allowed to fire hard working employees even when the company is losing vast amounts of money every day I guess a Communist country will be your idea of paradise

45. Justin150 wrote:
"#25 how about joining the real world - all major companies and most not so major companies are run to maximise profit/shareholder value, in fact you might want to check out the UK Companies Act and you will find the overriding duty of the directors is to do so."

Actually, I am a company director - but we'll let that pass. I actually think there are other things too - like making a product of the highest quality that people actually want to buy, having excellent customer service, having a loyal and effective workforce - and not having large amounts of debt. Anyone can borrow just to improve the surface appearance of their balance sheet and increase dividends. Great - let's all do it. Oh, I forgot, that's what all the big companies have done.

"All you doing is your version of the ill researched blitherings of various union leaders (and various EU politicians) - how disgraceful that these PE houses (who are probably nothing more than a bunch of wide boys and definitely did not go to the "right" school) come along and buy "our" companies and make the company's assets work harder."

Ok - if you say so.

"If you want a version of economics where all companies are not allowed to fire hard working employees even when the company is losing vast amounts of money every day I guess a Communist country will be your idea of paradise"

Who said anything about losing vast amounts of money? In your original post you were talking about maximizing profits as the only aim, not dealing with sorting out a loss-making business.

No, a Communist country is definitely not my idea of paradise, but capitalism has to have a meaningful context rooted in the society around it or you get the collapse of civilization - which I guess we're witnessing going on around us as we write... and aren't you proud you helped cause it?

Wee-Scamp, Robert and others;

Extract from Apax website re. New Look:

鈥淲e have transformed the business over the last 3 1/2 years and I am not sure we could have done that as a public company. An extraordinary number of changes have been made over a short period of time which has required a significant amount of financial investment and also a significant amount of communication to ensure that investors were comfortable with the scope of changes being made... this was a significant transformation and included investment in people and systems to create the infrastructure that gives the business the capability to grow to become a global retailer which is the ambition of the management team.鈥� Phil Wrigley, CEO

Employment has increased significantly with over 3,000 jobs created. EBITDA has also grown by over 50%. Apax Funds saw an opportunity to create value in a public to private transfer of ownership of New Look. During that period of ownership the management team has sought and achieved a significant transformation of the business.

This is what Private Equity is about. Growth and value creation. It is very rarely about asset stripping as the assets are almost never as valuable as a multiple of profits. It is also almost impossible to achieve without a significant equity investment. Great business, large employer, massive success story. Shame on Robert for painting it any other way to try to prove a non point. Private Equity is what it is. Equity. It is part of the solution not part of the problem, even it has made some mistakes over the last couple of years. (Who didn't?!).

Just read the FT front page Saturday on the 5 fold increase in City cash thats gone into the Tory coffers in the last few years.

The public sector unions got their reward under labour
The City will do so under the Conservatives
The cycle continues

What about the rest of you? WHO YOU GOT?

'They're not even there.....

It's OK with me'


This is my Final post
Good luck all !

There's a lot of prejudice in some of the posts here.

In the past 10 years, I saw:

1. An owner-manager fleecing a company dry and two minority PE partners seeing their money go south without the clout to stop it.
2. A technology transfer process radically updated by PE/early IPOed management.
3. PE fund managers solely interested in management fees and not growing the businesses they 'backed'.
4. Funds in London keen to take ideas from others then simply finding a copycat company nearer to home.
5. HEI managers on 拢90k+ a year telling a small boutique to take all the risk of an embryonic technology on board as terms for doing business.
6. IPOs done with strike prices totally unlinked to near-term income.
7. Well-managed start-ups with PE management generating both income and profit growth quarter by quarter, creating many jobs as a result.

There's no delineation as to where sharp practice, asset stripping, good management etc will be found.

All there is is a set of stakeholders trying to maximise their returns from their input.

Sometimes those interests align, other times not.

It suits the media to simplify it though.

Because then there's someone to blame.

"Well it's not that there's anything intrinsically wrong with these businesses."

You think so, Robert?
The New Look board have to pay off over 拢600 million of debt that falls due this year.
They wanted the new investors to take care of that for them, thank you very much.
And have you seen the High Street recently, Robert?
The closed shops and endless sales and discounting should give you some idea of what's going on there.