What is Private Equity Good For?

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From the London Guardian:

More than half the profits generated by private equity firms in recent years have been made by piling debt onto the companies they invest in, according to a report published today.

The findings of the first annual report on the industry, designed to increase transparency and improve the image of private equity, instead provided further ammunition for the industry’s critics.

The analysis by accounting firm Ernst & Young claims that just one fifth of returns achieved come from strategic and operational improvements.

Is it reasonable to expect that these ratios would be about the same for U.S. private equity firms?

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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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