Private equity is getting plenty of attention these days. Headlines routinely mention firms such as the Blackstone Group, Kohlberg Kravis Roberts, the Texas Pacific Group, the Carlyle Group and Providence Equity Partners as they recount the latest record-breaking buyout or takeover of a well-known company.
But Providence Equity’s chief executive, Jonathan Nelson, suggests that private equity’s new prominence has a downside: The rise of some widely accepted myths about the buyout business that could end up hurting the industry. “While many appreciate our role,” he told an audience of private equity professionals earlier this week at the Super Return conference in Frankfurt, “more still do not understand what we do and how we do it. Name recognition is not the same as real understanding.”
So Mr. Nelson ticked off what he considered to be five myths about the private equity business and tried to dispel them. Below, the myths and some excerpts from what he had to say about them:
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