Co-Chief Executive Officer David M. Rubenstein discussed the top ten changes to the private equity industry following the Great Recession.
In ValuCast, Mr. Rubenstein discussed trends and developments in the industry, including:-- Increased regulatory and public scrutiny-- Emergence of the individual investor-- Changes in fundraising dynamics-- Institutional investors seeking a greater variety of products and strategies-- Traditional private equity firms becoming alternative asset managers-- Increased focus on operational improvement versus financial engineering
Rubenstein bragged on private equity underwriter (PEU) use of financial engineering, but blamed other factors, like unprecedented tumult, when things went awry?
CNN Money came to Rubenstein's rescue two years ago on this topic:
"Financial engineering" is not some phony phrase created to make private equity look bad. It's used to describe the ways PE firms turn profit outside of the differential between purchase and sale price (using lots of leverage, dividend recaps, deal fees, etc.
The Great Recession created a period with a negative differential between purchase and sales price. That caused more dividend recapitalizations, referred to as liquidity recaps by Carlyle's Rubenstein.
Rubenstein sells PEU, 24 hours a day.