Overhang threatens health of private equity

THE LACKLUSTRE RETURNS generated by many private equity firms have barely dented the industry’s image as a moneymaking machine. It was this machine that attracted such large amounts of investment during the boom years, investment that in the new post-Lehman reality has turned from a head start into an Achilles heel. The job of a private equity firm is to buy companies, make them better and sell them for more than they paid for them – and this is what their limited partners expect them to do.