KUHN CAPITAL Friday, July 21, 2017
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Private Equity Does Good

12/12/12

We're fans of Professor John Paglia at Pepperdine’s Graziadio School of Business and Management. He produces an annual "Cost of Capital" survey that lays out what different forms of capital cost, like factoring (the most expensive) to cash-flow loans (the least). For info on Paglia's work, see his website.

Anyway, he's just completed another study that demonstrates how PE firm investment increases both sales and job growth at small and medium-sized businesses in the US.

As Paglia says, “The magnitude of revenue and job growth for private-capital backed companies was surprising. We expected it to be positive, especially at the lower end of the marketplace, but we didn’t realize how large it would be. The results suggest two things: private capital is a powerful stimulant for small- and mid-sized companies; and when capital is deployed in this segment, it’s focused on value creation rather than financial engineering, which is often seen in larger buyout transactions.”

Here, here! Now maybe the politicians will quit bashing PE firms, at least all but the biggest ones. Nah... probably not.


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