Friday, September 30, 2011

Why Private Equity Is Good for America

I read an interesting article by Tony James, the president of Blackstone, a private equity firm most of you have probably never heard of unless you are an avid Wall Street Journal reader (although they do garner the occasional mention in Fortune and other business and financial press). Mr. James' provided his top four reasons that private equity can help with the economic recovery or, in other words, is good for America.

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Those reasons are as follows:

  1. Private equity firms help rescue troubled companies.
  2. PE firms provide (or can provide) growth capital to nascent companies.
  3. PE firms help pension funds meet the obligations they have to the recipents of those pensions.
  4. Private equity firms help developing economies grow.

Of course, not all private equity firms do all of the above, which Blackstone apparently does. Some focus on geographic areas or on specific revenue or EBITDA ranges or on a particular stage. Others, usually smaller PE firms, may not pursue pension funds, instead obtaining their funds from other, smaller institutions and individuals. Overall, however, I agree with the premise here. Whether or not one particular fund addresses all these areas, collectively, I believe private equity firms definitely do help as outlined in Mr. James' reasons and are, indeed, good for America.

To read the article in its entirety, go to Tony James' Top Four Reasons.



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