WSJ report challenges role of private equity in average consumer
Becky Pritchard for the Wall Street Journal did an investigative interview about how private equity plays a role in an average person. Pritchard reportedly went on a week-long experiment living without subscribing or using any products and services that have tie-ins or connections with private equity firms. According to Pritchard, she had diffulty living without them and realized how deeply entwined private equity is in our lives.
Pritchard asked two experts about the importance of private equity and how private equity affects our lives.
Meziane Lasfer, Professor of Finance, Cass Business School said, "Private equity firms may destroy the value for the economy because of two main factors. The first, they use lots of debt, therefore they make those companies that they take over even more risky, then they're likely to go bankrupt. And the second one is buy using a lot of debt, they can deduct a large part of interest from their (private equity) tax ...and therefore they end up paying very, very low amount of tax."
On the other hand, Lasfer said private equity had been a great force that had kept the economy going. Noting that private equity firms take or acquire companies to make them perform better, Lasfer said that private equity's hand in the economy creates jobs for the economy, those putting more money on hands on workers to spend on their needs and wants.
British Private Equity & Venture Capital Association Director General Tim Hames downplayed the role of private equity in the society. "I know that people care about is whether the customer experience, whether food, fashion, or consumer retailer or whatever , is enjoyable for in a decent sense of money. If people thinks it ticks that box, I don'rt really think people bother who the private equity that owns it, or whether the Martians own it. And equally, if you think you have a lousy experience, you're gonna blame regardless whoever's in charge of the business structure."