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Vultures and plundering anglo saxons is how many people think of US private equity and if you look back in history it's not hard to see why. The combination of political moves like Ronald Reagan's reduction of capital gains tax in 1981 and access to cheap credit in 2007 led to the well known 'greed is good' mantra of the 1980s. But those who choose to see only the private equity is evil myths of the press miss the point of private equity in the US. The system provides capital to small and growing businesses and over 50 years has strengthened communities, customers and created jobs. Rather than slating it, says Pamela Hendrickson, COO of the Riverside Company and immediate past president of ACG Global, we should be celebrating it.
Pam Hendrickson was last week's guest presenter at a well attended lunch meeting kindly sponsored by Orangefield. Dispelling the evil myth, Pam spoke about how private equity organisations like Riverside help companies with 'creative destruction'. "We help them think through new opportunities," she says, "and create value by getting rid of what is not value creating. With growth capital we help them to do the things right the first time and provide them with experienced management to leverage and grow into even more successful organisations." With inspiring portofolio company video testemonials it was hard not to agree.
Following the presentation the discussion turned to whether US or European companies generate better returns. The answer was unknown but the feeling in the room was overwhelmingly towards US companies. But why? Less regulation? Or cultural differences squeezing more out of the business and employees? Or better management....for on that point all were agreed....there is 100% correlation between quality of management teams and companies who do well.
Before returning to New York, Pam was Orangefield's guest at the beautiful Rijksmuseum.
ACG Holland would like to thank Pam for taking the time to meet members of ACG Holland and share her views.