Private Equity’s Impact on the Economy and the Labour Market

The main purpose of this year’s German–British trade union forum was to addressthe emerging challenges posed by new financial actors, such as private equity andhedge funds. Key topics included the ownership structure, lack of public disclosureand management strategies adopted to meet the new demands of capital markets. Most of the discussion addressed the unique challenges posed by private equityfunds. The ownership structure and legal status of private equity funds bestowunique financial power, combining tax concessions with no public disclosure.– Private equity funds are limited companies, meaning they have no legalobligation to disclose their balance sheets.– The finite life of such funds (10 years) means private equity funds normally aimto dispose of the purchased company within a timeframe of 3 to 5 years.– Private equity uses a point concept of value: the primary aim is to make the firmmost profitable just before it is relisted on public equity markets.– In many ways this strategy prevents long-term investment.