Guy Hands and True Values

The great weather in Munich has given way to the typical cold and cloud of Northern Europe. And the mid-market players have given way to the mega funds.

Guy Hands of Terra Firma lectured on returning to the true values of private equity in the current financial market. Such platitudes are often batted around at conferences, but what do they really mean? What are the true values of private equity?

According to Mr. Hands they are very basic: Invest in companies at a reasonable price and make them more profitable.

Easier said than done Mr. Hands.

Terra Firma’s 100-day plan for EMI has not been entirely successful. Hands described EMI as a company of thousands of people that is controlled by 200 or so AR people. He said that they are the types of people that come in late and are very cool and are supposed to know what is hip and happening. However, many of the labels operating at EMI are not profitable in fact they are losing money.

Hands said that he told one AR director: “With this release we could have taped a £50 to each one we sold and lost less money and we wouldn’t have had to pay you.” Hands wants to reduce the amount control from these so called creatives and put it with the “suits” – the marketing teams and the sales team who know what sells.

Now that’s what Hands calls music.