Private Equity Quote

This week Blackstone, one of the world’s largest private equity firms announced it was likely to soon go public.  Ironic that a business based upon taking companies private is now going public…  Reflecting upon this, Merrill Lynch today ran the following quote (see page 5 of report here) in it’s daily North America Morning Market Memo by David Rosenberg.  His topic is what happens after a business is purchased by a private equity firm:

"All of a sudden managment is focused and will do anything to maintain or increase cash flow.  Here’s the usual list:  Cut spending, workers, officeds, factories and advertising, and with tech companies now in play cut R&D, their lifeblood.  Don’t mistake financial engineering for company building."

Well said Mr. Rosenberg.

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