There’s a longstanding debate about whether private equity investors create value for the firms they buy. The evidence shows that PE-backed firms generate strong returns for investors, but they’re often accused of 1) focusing too sharply on short-term results (hurting firms in the long run), 2) loading target companies with too much debt (increasing their risk of going bust), and 3) caring more about cost-cutting (eliminating jobs) than revenue growth. Maybe you remember how savagely the industry was portrayed during the 2012 U.S. election? Suffice it to say that a 2016 Mitt Romney campaign isn’t being championed on Wall Street.
Private Equity Can Make Firms More Innovative
A new paper shows how leveraged buyouts lead to more patents.
June 29, 2015
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