Private equity have helped launch new businesses

Private equity firms have recently come under scrutiny, with their role in the demise of Payless Shoes, Toys R Us, and RadioShack receiving significant

media coverage. Taylor Swift’s feuds with record label owners further highlighted this issue while ProPublica published a study showing some hospital employees unable to purchase basic medical supplies like sponges and IV fluids as the costs were shifted onto patients instead of employees.

Critics allege that private equity firms are money monsters, devouring companies before disposing of them as scrap. Prioritizing short-term profits over long-term value creation and inflicting worker harm in the process. But private equity sources I contacted acknowledged this was unfairly caricatured while acknowledging there are bad actors within their firms as well as firms doing great work creating value and providing good intentions toward employees and consumers.

Carlyle Group points to many success stories, including their turnaround of Dunkin’ Brands (the parent company of Dunkin’ Donuts and Baskin-Robbins) after purchasing it in 2005. Implementing operational improvements and expansion strategies allowed rapid growth and profitability – returning over three times its original investment!

Vista Equity Partners’ investment in marketing automation software company Marketo was one such successful example of private equity success; Adobe Systems purchased it for $4.75 billion later that same year. Other portfolio company investments have demonstrated the power of targeting high-growth industries while investing in operational improvements and expansion strategies to achieve impressive returns.

Private equity has even helped launch new businesses, like Sutter Hill Ventures’ investment in cloud data warehousing provider Snowflake. By understanding the expanding need and opportunity in this space, they were instrumental in creating an easily scalable platform now utilized by some of the world’s most recognizable enterprises.

PE firms are taking steps to enhance their public image by offering equity in the companies they buy; this demonstrates their investment in their portfolio companies’ growth and success as well as showing they do have good intentions towards workers despite media scrutiny.

Private equity success relies heavily on making wise investment choices. Successful firms focus on selecting businesses with core value creation as the only guarantee that will generate targeted returns upon sale, as well as working to identify undervalued assets and cut expenses while prioritizing core values in operating companies.

Private equity can achieve success by cultivating and maintaining trusted relationships with its investors that are founded in integrity and transparency. This is essential in any investment firm, but particularly critical when dealing with an industry subjected to increased scrutiny by various stakeholder groups that requires upholding its reputation in order to remain competitive.