The best practices of private equity, such as focusing on shareholder value, improving companies and balancing risks and rewards, can be part of the solution to the current global liquidity crisis, says a partner in the private equity giant Kohlberg Kravis Roberts & Co.
Perry Golkin was the keynote speaker at the Global Private Equity Conference at the Michigan League in October, hosted by Michigan’s Ross School of Business, the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies, and the Michigan Private Equity Partnership. The conference drew roughly 175 private equity professionals, investment bankers and alumni, according to an article in Michigan’s Ross School of Business online newsletter.
While private equity often gets a bad rap due to its “strip and flip” reputation, Golkin said the numbers show that companies with private equity owners outperform public indices. More often than not, private equity improves a company’s revenues, margins and jobs created.
The biggest problem facing private equity today is lack of financing, which is the lifeblood for deals. Private equity firms will have to put up more of their own money to close deals, but prices for companies are dropping, creating value and the potential for attractive returns, Golkin said.
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