ICAEW head of corporate finance defends private equity

ICAEW head of corporate finance defends private equity

Institute head slams 'ill-informed rubbish' on private equity

The head of the world’s largest network of corporate financiers,
ICAEW corporate finance
faculty chairman Chris Ward, has issued a robust defence of the private equity
industry, in response to criticisms that the advisory community has failed to
publicly support the sector.

‘There are some sections of the press who have criticised the advisory
community for being slow to defend private equity, while we have made and
continue to make a good living from advising on private equity transactions. I
want to put that right,’ Ward, also global head of corporate finance at
Deloitte, said at the faculty’s annual dinner last week.

Since the start of the year private equity has been criticised by various
labour groups and politicians for asset stripping and enjoying unfair tax
benefits because they leverage their transactions.

Ward described such criticisms as ‘ill-informed rubbish’.

‘Private equity fund managers want to buy, build and develop businesses so
they become more valuable. Are they asset-strippers? My answer is no. But there
is no room for passengers nor surplus assets in an efficient business, and there
is a need on occasions to downsize the workforce and sell off assets to make the
business more viable in the future,’ Ward said.

He also rebuffed accusations that private equity enjoyed tax benefits that
were unavailable to other businesses.

‘It is certainly not true to imply that PE backed businesses are somehow
cheating the Exchequer, which is only too happy to tax to the hilt the
recipients of the interest that is paid – the banks,’ Ward said.

Ward’s defence of the industry comes as senior private equity heads prepare
to face the influential Treasury select committee.

Damon Buffini, head of Permira, KKR boss Dominic Murphy, 3i’s Philip Yea,
Blackstone’s David Blitzer and Robert Easton from Carlyle are to appear before
the committee on 20 June, where politicians will grill them on the workings of
the industry.

Politicians have taken a strong interest in private equity after the GMB
Union and Labour MP Peter Hain launched an attack on the industry, accusing it
of opportunism, greed and lacking transparency.

The industry has responded through its trade body, the
British Private Equity and Venture Capital
Association
(BVCA), which formed a working party headed by Sir David Walker,
a former Bank of England director, to ‘examine ways in which levels of
disclosure in companies backed by the UK private equity industry could be
improved’.

Critics, however, have not backed down and still maintain that the industry
needs more regulation.

For more click here

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource