UK private equity pros have had their reputations dragged through the mud in 2007, with average Londoners to be forgiven for thinking that the whole lot is made up of greedy corporate raiders who get bigger bonuses for stepping on the working man. What is really needed is a study of private equity ethics, to see if the mud deserves to stick. Too bad it hasn’t happened yet.
Instead, what we get is an utterly worthless report by Grant Thornton, which decided to get to the truth of the matter by surveying… Private equity pros. Not by doing a qualitative review of actual private equity transactions, which would include interviews with equity sponsors, portfolio company management and portfolio company employees. But by just asking that first group if they feel “ethical.”
Big shock: Most private equity pros say that their industry has “high” ethical standards. Why not also ask if they’re good parents (but don’t ask the kids)?
The Grant Thornton consultants working on this would have been equally productive by scoring a symphony of piano-playing cats on YouTube. It reminds me of that scene from Dave, when Charles Grodin learns that the government is spending money to make American car buyers feel better about cars they had already bought. Just mind-numbing.
I do believe that most private equity pros are ethical, but have little interest in taking their word for it.
Grant Thornton is not yet releasing the raw data, but has issued the following release: Ethics.doc. Read it if you care.