Weathering a Storm

This year, private equity (PE) firms worldwide are expected to raise a total of $500 billion. Despite this success -- or perhaps because of it -- private equity firms recently have been on the receiving end of attacks from politicians and union leaders around the world. In the US, Congressional tax committees have set their sights on PE firms as a potential source of new tax revenue. Despite scrutiny of the tax treatment carried interest compensation and clubbing, private equity has done extremely well, not only for itself but also for the general economy. Although private equity is now under the microscope, the fact is that PE funds have generated impressive returns for their investors, aligned management interests closely with those of their investors, and improved the operations of many of the companies in which they invest.