That expansion has slowed, leaving some investors worried that managers will resort to cooking books to keep top executives and key shareholders happy.
In addition, before the financial crisis hit, several auctions brought stiff competition by private equity bidders gunning for assets. That kind of competition can cause a firm to rush due diligence in order to seal the deal.
One of the first steps a private equity investor implements is making sure that the incentives of their operational managers are tightly aligned with the portfolio company’s success.
That can work to a firm’s advantage when the economy is humming. But when things slow, that approach can backfire.
Business Daily
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