Private equity will emerge much-changed

September 16 - FT.com - Remember private equity? It was the future once – the model not just for amassing vast personal wealth but for running companies, period. At present, it is shrouded in the fog that covers most of the financial landscape. But when that clears, what place will private equity have in the scheme of things?

To answer the question, we must first deconstruct the model. How much of the industry’s returns in recent years came from running companies better, and how much from financial engineering or simple leverage?

Indeed, how much of the takings for private equity managers came from their share of the profits and how much from management fees?

The hard-line advocates of private equity will tell you that nearly all the returns came from better management. Read More.