Private Equity’s Long View

What can the gods of private equity teach us about managing for the long term? If you think that their lightning reflex, do-what-it-takes approach has nothing to tell us about the long haul, you’d be wrong. Maybe you imagine they simply take a business private, load it with debt, strip its assets, then sell it a few months later for multiples of the purchase price—a strategy that seems decidedly hostile to the long term. But the experience of properties put through what I’d call a “strategy workout” by PE firms suggests that the exercise can actually enhance long-term performance—and that ownership over the long haul is neither necessary nor sufficient to set a company up for the future.