Private Equity Statement

I have wanted to put this on here for a while, it has been on the company website for a while so is out it the big wide world – but sums up quite nicely the company’s attitude and feeling towards the industry that we work in. Private Equity has had some really bad press over the past months, mostly from people outside the industry, and those who don’t understand it – especially the Unions. Anyway, have a read, if you have any questions, let me know:

Managing Partner of XX Private Equity, makes an industry statement.

When your children are afraid to say what their Dad does in the playground, you know the private equity industry has the most serious image problem it has ever faced. But as every good school teacher knows, the children who shout loudest do not always have the right answer.

The fact is that our industry has been weak in presenting its case over a number of years. Consequently the industry now faces attacks on many fronts led by an over-arching assertion that we are a force for evil, undermining the British economy, breaking rules to avoid tax.

Think how many doctors and nurses could be employed if only those wicked pivate equity boys could be shamed into paying their dues. The truth is, as anyone who is associated with the industry knows, very different to the images promoted by the GMB Trade Union.

Fundamentally mid market private equity brings a huge number of positive attributes to the UK economy. The heart of what we do is to give a platform for excellent management teams to rapidly grow their businesses.

XX equals growth. We nurture UK private businesses to become market leaders, improving their products by selling and marketing more effectively and assisting the development of their management teams. Growth means more staff; more investment; more sales and wait for it, because I am proud to say it, more profits.

Take one example. Penn Pharmaceuticals is a former investment in our portfolio which continues to go from success to success. It was originally backed in a £12m management buy out in September 2000. The management team worked with XX to build a compelling business plan and was fully supported. We are proud to have helped this company grow turnover five-fold, profits over 10-fold and consequently increased the number of staff by more than 100 per cent.

In April the pharmaceuticals business was sold for £67m following the £62.5m sale in 2004 of the products division. This highlights mid market private equity at its best. It is about providing a great place for management teams to realise their ambitions. These deals are about growth and have nothing to do with the financial engineering associated with huge leverage and quick flips.

Asset stripping, mass sackings and factory closures are just not part of how mid market private equity investors build value. We do of course closely watch the costs of our portfolio companies but generating value demands growth and that is our focus.

Working in tandem with management to accelerate growth is a fantastic experience and a real force for good as the entire company’s team know they are part of something special and like getting out of bed in the morning to play their part in building something unique.


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