Clear Channel, Americaâ€™s largest radio station operator and billboard owner, was bought out last week by two major private equity firms for $19 billion.Â That same day, it was announced that Readerâ€™s Digest Association Inc. was being acquired by an investor group for $1.6 billion.Â These buyouts, becoming ever more common, are examples of a growing trend in big business: the power of private equity.Â Since the days of KKR â€“ the company that took industry heavyweights like RJR Nabisco private in the late 1980s â€“ there have seen significantly larger returns for investors in private equity firms than earned by public shareholders with similar holdings, and this difference has grown substantially in the past year. (â€œPrivate equity, private livesâ€). The impact on business is that companies taken private have a longer term objective to sell at a healthy profit, and less of a focus on quarterly performance.Â
Do you work for a private company, or a publicly traded one? How are decisions made at the company you currently work for â€“ in the interest of the quarter or the long-term? Do you think private equity firms artificially drive up the price of companies? If you are not in business, do you feel a continued trend towards private holdings limits your ability to invest in the companies you believe in?