Wednesday, January 03, 2007

Corporate governance: Private matters

'Sell in May and go away' used to be the mantra of a more leisurely class of stockbrokers. It probably doesn’t work now. And another mantra that works even less is predicting the direction in which the business world may move across this new year.

But there are two themes which people ought to have uppermost in their minds as the year and their business prospects unfold. The first is the dilemma posed by private equity. In the first half of 2006, there were more funds raised through private equity than through IPOs and the public markets. Now we all know why this is.

It is argued that it is much easier to pull value out of a wayward company if you can do it, as it were, behind closed doors. And all the support can be rejuvenated. As one venture capitalist often boasts, he can get the auditors in and tell them that what they did last time was a disgrace and can they, for gratis, do it again, only effectively this time round.

Corporate governance: Private matters

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