This week Blackstone, one of the world’s largest private equity firms announced it was likely to soon go public. Ironic that a business based upon taking companies private is now going public… Reflecting upon this, Merrill Lynch today ran the following quote (see page 5 of report here) in it’s daily North America Morning Market Memo by David Rosenberg. His topic is what happens after a business is purchased by a private equity firm:
"All of a sudden managment is focused and will do anything to maintain or increase cash flow. Here’s the usual list: Cut spending, workers, officeds, factories and advertising, and with tech companies now in play cut R&D, their lifeblood. Don’t mistake financial engineering for company building."
Well said Mr. Rosenberg.
