Private equity rides to rescue of failing firms

PRIVATE equity firms were once known as Barbarians at the Gate – after KKR’s $25bn leveraged buyout of RJR Nabisco in 1988 was immortalised in a bestseller of that name – but their image has picked up, at least according to one expert.

Peter Hemington, M&A partner at BDO, said buyout firms are no longer barbarians but “white knights”, due to their plethora of rescue takeovers. “With private companies choosing to maintain cash reserves, it has been the private equity industry that has come to the rescue of both businesses and, critically for the government, the jobs of the employees.”

Can he prove it? Well, new BDO figures do show private equity firms are still stumping up the cash despite the slip back into recession.

Its private equity price index was 14.1 in the first quarter of this year – well up on the 10.8 multiple seen this time last year, and the proportion of disclosed private equity deals over £50m rose from 31 per cent to 50 per cent. All good news for retailers that need a lifeline – just don’t expect another book about it.