Research Program

The Future of Private Equity

William D. Cohan writes for The New York Times on the future of private equity:

The formula’s success has been stunning. Private equity firms, once quaint partnerships, are now publicly traded behemoths. Steve Schwarzman, a co-founder of the powerful Blackstone Group with more than $600 billion under management, is worth roughly $23 billion. Leon Black, a co-founder of Apollo Global Management, is worth about $10 billion.

But now the party could be ending. In a little-noticed December ruling in a case involving a failed 2014 leveraged buyout, Jed S. Rakoff, a federal judge in the Southern District of New York, threw some sand into the otherwise well-lubricated gears of what has been a 40-year financial bonanza. It’s about time we started asking tough questions about the ramifications of loading up companies with huge amounts of debt they will surely have difficulty repaying.

The Nine West legal ruling discussed in Cohan’s article may have some troubling implications for future deal flow. Read the full article.

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