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The Private Equity Myth

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  • Platt Harlan D

    (Northeastern University)

Abstract

Private equity has become a huge force in American business, but how is it creating value. The paper shows that private equity firms in recent years have paid high prices for acquired companies, leveraging them up, and then hoping to sell them to someone else. Doubts are raised as to whether this is a good strategy for investors or the nation.

Suggested Citation

  • Platt Harlan D, 2009. "The Private Equity Myth," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 4(1), pages 1-19, October.
    • Handle: RePEc:bpj:jbvela:v:4:y:2009:i:1:n:7
    DOI: 10.2202/1932-9156.1065
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    References listed on IDEAS

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    1. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    2. Tobias J. Moskowitz & Annette Vissing-Jørgensen, 2002. "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?," American Economic Review, American Economic Association, vol. 92(4), pages 745-778, September.
    3. Ju, Nengjiu & Parrino, Robert & Poteshman, Allen M. & Weisbach, Michael S., 2005. "Horses and Rabbits? Trade-Off Theory and Optimal Capital Structure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(2), pages 259-281, June.
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    Cited by:

    1. Eileen Appelbaum & Rosemary Batt, 2012. "A Primer on Private Equity at Work," Challenge, Taylor & Francis Journals, vol. 55(5), pages 5-38.

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