Private equity’s silent partners

After all, the profession has not exactly been in the front line defending
private equity at a time when it is facing an unprecedented torrent of criticism
from politicians, unions and the public.

Last week we asked all the Big Four, who have earned a great deal from the
industry, about their views. Only Ernst & Young leaped to its defence.
Deloitte and KPMG declined to comment, while PwC did not return our calls.

Sure, firms like to tread a fine line in these matters. They earn money from
private equity, but they earn money from government as well. And if the unions,
as seems likely, are about to gain much more power in Westminster, you don’t
want to be on their bad side.

But that’s a cowardly position to take, and there is a distinction between
offering intelligent commentary to help explain private equity’s position, and
taking its side.

Two things are now likely to happen as a result of the row.

If the Treasury does decide to change the tax rules for private equity, or
new regulation chokes an industry that has thrived on flexibility and speed,
don’t be surprised if transaction volumes tail off and deal values start to

That would be bad news for the accounting firms making money from the

But more promisingly, a new code of conduct on transparency could lead to a
need for more advice to help present private equity figures. That, of course,
would be more than welcome.

It would be absurd to suggest that the accounting firms have planned it to
turn out this way, but if that’s the way the cookie crumbles, they certainly
won’t be complaining.

Nicholas Neveling is a reporter with Accountancy

Related reading