Explaining the Private Equity Boom

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It's not often that the financial press does a good job explaining things like the rise of private equity dealmaking. Newspapers are largely event driven, and the focus on yesterday's deal often makes for bad or confusing stories. But Liz Peek's column in today's New York Sun does a good job of explaining private equity, in part because it is largely a rehearsing of a conversation she had with an unidentified industry big shot.
The story is familiar to most regular readers of DealBreaker but if you're still trying to figure out what's going on with this private equity boom, Peek's column is a good starting place. She touches on most of the important divers of the boom:
•The regulatory burden on public companies makes going private more attractive.
•Scrutiny of executive compensation means chief executives can often make far more money running a private company.
•Public market focus on quarterly financial results puts pressure on executives to seek quick fixes, engage in creative accounting and interferes with long-term planning.
•After the tech bust, stock prices of many companies were cheap enough that they drew in buyers.
•Tight spreads in debt markets means financing for acquiring troubled companies is relatively cheap.
Why Private Equity Is Through the Roof [New York Sun]

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