Friday, October 8, 2010

Buffet Slams Private Equity

Times are tough when billionaires dis each other. Bloomberg reported:

Warren Buffett, Berkshire Hathaway Inc.’s billionaire chairman, said he avoids acquiring companies from leveraged-buyout firms because they focus on “exit strategy.” Buyout firms “don’t know the business,” he said. 
Leveraged-buyout firms is the old name for corporate raiders. 

Private-equity firms pool investor money to take over companies, financing the purchases mostly with debt, with the intention of selling them later for a profit. Blackstone Group LP, with CEO Stephen Schwarzman, is the biggest private equity firm, followed by The Carlyle Group. “We haven’t bought a single company from an LBO operator,” Buffett said.

Private equity underwriters (PEU's) and are in the midst of yet another renaming. Their trade group added "growth capital" to become PEGCC.  It hangs deep in the throat for a reason.