P.E. Firms Keeping More Cos. Private

Private equity firms are straying from the usual path of taking a company private, fixing it up and then taking it public again, and are just keeping them private, Reuters reports. The nature of the company may be the deciding factor. “There are cases where it is appropriate, given the ability of private equity to pay a fair premium to shareholders and stakeholders, for those companies to move to the private side,” Eric Karp of Banc of America Securities told Reuters, noting that demand for some “relatively mature, high-cash flowing companies is not that great.” One reason, he suggested, is that they may “not be experiencing a lot of growth.” And so, if a company needs to restructure its business model, according to Reuters, it may find private investors more willing to wait it out than investors in a public company. As a result, said Karp, “there is a real question mark as to whether some of the larger transactions you are seeing may be indicative of a more fundamental shift in the permanent ownership of certain types of companies.”