The period between the fall of the Berlin Wall and the Great Recession saw probably the most profound reshuffle of individual incomes on the (Monsanto the toxic face of globalisation ) global scale since the Industrial Revolution Iron CurtainThe widely-read U.S. financial blog nakedcapitalism (Naked Capitalism) is running a fascinating post about the private equity industry, which involves the release of a number of apparently sensitive documents. The article notes:
“For decades, private equity (PE) firms have asserted that limited partnership agreements (LPAs), the contracts between themselves and investors, should be treated in their entirety as trade secrets, and therefore not subject to disclosure under Freedom of Information Act laws in any jurisdiction. These private equity general partners argued that the information in their contracts was so sensitive that it needed to be shielded from competitors’ eyes, otherwise their unique, critically important know-how would be appropriated and used against them.”
The New York Times recently quoted a U.S. official as saying “in some cases, investors’ pockets are being picked.” (Read more about media starting to wake up to the folly of investing in private equity (or hedge funds) In places like New Statesman.)
Of course, there are cases when private equity firms also seek to inject business nouse into badly managed companies, but as this article describes, it’s not necessarily any more profitable to do so when you may be able to make a quicker buck by just buying, squeezing, flipping and then discarding the husk, moving onto the next target.
Naked Capitalism is running a series on this, and the documents are available on their site, for those who take an interest in this sort of thing.