Private equity: the victims.

(From Guardian Unlimited)

Back in 2007 when private equity emerged blinking into the media spotlight, we were told that highly leveraged buyouts would deliver creative, engaged management that would turn stodgy companies, let down by their sleepy boards, into lean growth machines.

Those who raised concerns about the risks of introducing massive loans on to company accounts and into the UK economy were dismissed as simpletons who didn't understand this brave new world of benign debt. The problem with corporate Britain, the private equiteers told us, was that public companies had failed to take full advantage of cheap money by borrowing up to the limit. The government seemed to buy this, continuing to give highly lucrative tax breaks to private equity partners and doing little to address the worries of trade unions and others.

But the private equity pitch was nothing more than hype. The detractors were right. The era of cheap and easy money is over. A global recession is biting and the evidence is growing that those firms unlucky enough to have been swallowed by a private equity company are more at risk than they otherwise would have been. As the Guardian reported yesterday, Jon Moulton -- one of the few private equity players not prone to self-delusion -- asserts that a third of mid-sized firms subject to leveraged buyouts will fail or require "restructuring" , a euphemism that hides many forms of misery for the workforce in these companies.

The ultimate beneficiaries of the private equity fad have not been the legions of well-paid, highly ...