Private equity has ‘failed at the PR game’

Insider Business Club

Insider Business Club

Private equity’s ‘failure to play the PR game’ has forced it on the
defensive, the vice-chairman of
the ICAEW corporate
finance faculty
, Ian Leaman, said ahead of today’s publication of the Walker

The 50-page report, which was put together by former Morgan Stanley
International chairman Sir David Walker, will be presented to the London Stock
Exchange later today.

It will detail how the industry plans to inject more transparency into its
workings, and start a three-month feedback process.

Speaking ahead of that process at this week’s
Business Club
, Leaman (who is also founder director of Buckingham Corporate
Finance), said: ‘One accusation which can be fairly be laid at the door of the
private equity community is its abject failure to play the PR game. Now they are
on the back foot and that’s a very difficult place to be.’

Ernst & Young
partner John Cole added: ‘Certainly they have been surprised by the debate,
especially when they started investing in the high street, which then gets the
media attention. Had they had been articulating the case of private equity more
visibly and more coherently some years ago, rather than being pretty much
invisible – and had they perhaps been more proactive in extolling why it is a
force for good – the debate would have started from somewhere else.’

Mazars partner Richard Metcalfe said:
‘It is absolutely clear that private equity firms have not been as transparent
as they could have been.’

The Walker report is expected to say buyout firms should appoint external,
non-executive directors to the boards of some companies bought by private equity
and disclose more about debt structures.

In a poll of Insider Business Club listeners, 25% said opponents of private
equity were simply attacking the sector to gain political mileage. However, the
same proportion said there were genuine concerns that the industry needed to be
regulated and monitored more closely.

Some 57% said they believed the approach of private equity was too
short-termist, while 78% said existing tax policies unfairly favoured private

In total, 100% said they belived the private equity model was better at
extracting value than the publically listed model.

Further reading:

British Private Equity and Venture Capital

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