A very private enterprise

Private equity investment, backing venture capital and management buy-outs, has been around a long time. Private-equity takeovers of public companies listed on the stock exchange are a more recent development; and the number and size of such transactions has increased dramatically. Since some identified individuals have made enormous fortunes, inevitably there has been a bit of an outcry.
Several forces have come together. Abundant liquidity has made banks ready to lend large amounts of money at interest rates which are still low by historical standards. Energetic entrepreneurs have spotted that they can exploit opportunities arising from the way the stock exchange values some companies. On top of this, tax changes have made the net returns seriously attractive, assuming all goes well.

The stock exchange arrives at market prices which suit buyers and sellers; but fund managers have to perform and are judged on a quarterly or half-yearly basis. Chief executives, under pressure to avoid disappointments, often judge that capital spending with long-term horizons and high levels of gearing is too risky.