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The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything Hardcover – September 11, 2012
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From the Book: Private Equity Facts and Figures
- Number of people employed by private-equity owned companies in the U.S.: 8.1 million
- Private-equity backed companies headquartered in the U.S.: 15,300
- Examples of private-equity owned companies: Toys "R" Us, The Weather Channel, Madam Tussaud's, Dunkin' Donuts, J. Crew, Outback Steakhouse, Gymboree, Guitar Center, Miramax, Sea World
- Number of private equity firms in the U.S.: 2,600
- Total assets under management in all types of private-equity funds: about $3 trillion
- Capital committed since 1990 to private-equity funds by California Public Employees' Retirement System (CalPERS): $66.8 billion
- Combined revenues of KKR-owned companies in 2011: $200 billion
- Total value of private-equity deals announced during the past decade: $3.89 trillion
- Amount Carlyle's three founders were paid in 2011, including salary, bonus and distributions from funds: $413 million
Sources: Bloomberg, Private Equity Growth Capital Council, Preqin, firm and pension websites
Subtitled Inside the Trillion Dollar Private Equity Industry that owns Everything, Kelly tries to demystify the complex world of private equity through telling the stories of the leading characters and key firms in the industry.
A Bloomberg news reporter, Kelly is familiar with his subject and he traces the mushrooming of this industry from a relatively small niche area of financial service into a globally powerful phenomenon.
The book has a timely edge given the presidential candidacy of Mitt Romney, a former chief executive of Bain Capital, and is certainly well researched.
Kelly notes that he is trained to look for surprise and that as he researched the book, the omnipresence of the industry surprised even him. So much is owned by the industry, and the appetite to run the numbers on businesses that are not, appears to be relentless.
Kelly does his best to make the complex simple with glossaries and charts; it is a challenging read nonetheless.
Although interesting for the general reader, the book will be of most interest to those who work in the global financial services industry and who can relate readily to the firms under consideration here. (Irishtimes.com, November 2012)
Top Customer Reviews
Jason Kelly gives us a neutral view of what is going on in private equity. I think he is neutral, because he does not come across as a fan or a critic. Personally, I think that is hard to do with private equity, because 1) it is easy for some to become amazed at the success of some incredibly wealthy and clever businessmen, or 2) it is easy to take offense at these shadowy capitalists that have produced bankruptcies, fired many people, and have been very clever at using the tax code to pay minimal taxes.
Both of these views are caricatures and the truth does not lie in-between but embraces both views. Indeed, in many cases, jobs have been preserved or created through private ownership of firms. Many firms might have died without private equity restructuring the company, leading to the loss of all jobs.
Jason Kelly takes you through all aspects of private equity:
He also introduces you to all of the major private equity shops, and their leadership.
One thing the author highlights in the book is the pervasiveness of private equity. He notes how many businesses are managed by private equity. In general, these are businesses with steady cash flows that can service the debt that the private equity funds borrowed to buy them.
Some private equity firms are passive, and don't try to improve operations. Others make a great effort to grow the companies, hiring new people in the process, and taking risks to create a better company. It depends on the philosophy of the private equity owners.
The book does note the favored tax status of carried interest, but takes the position that the private equity investors are following the law, and that they will follow the law should it be changed. (My simple idea is that interest should not be taxed, or be a tax deduction.)
The book does note trends:
Private equity is becoming more public, as more large private equity firms go public.
Complexity inside private equity firms is growing as they broaden the scope of services that they provide.
The owner/founders are moving on, and a new generation of management is taking the reins.
Returns may be falling as private equity gets larger.
In all, a good book, but one that may leave partisans unsatisfied. It does not demonize or engage in hagiography.
Who would benefit from this book: Anyone wanting to learn about private equity would benefit from this book.