PE Industry Group Video Tries to Explain Private Equity to General Public

Mitt Romney’s presidential campaign and last week’s dismal IPO from the Carlyle Group are just the latest events that reveal one truth: Private equity firms are misunderstood.

Today, the Private Equity Growth Capital Council tries to address this issue with its latest video. Cast in whiteboard style, “What is Private Equity?” gives a very simplistic explanation of the industry. Private equity makes an enormous contribution to the U.S. economy, a female voice says. The PEGCC goes on to explain how the PE industry invests in two types of companies: promising firms poised for growth and expansion, as well as “fixer uppers.”

PE partners with public and private investors to buy these companies, improve them over time and then sell them for a profit, the video says. But the PEGCC doesn’t address some of the criticisms of PE firms — that they load companies with debt, cut staff to achieve profits and quickly flip companies.

The video is part of PEGCC’s “Private Equity at Work” initiative that was launched earlier this year. Here it is:

Image credit:  PR concept photo courtesy of ShutterStock