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Private Equity’s New Phase

Harvard Business Review

The primary focus was on fixing the acquired firm through financial restructuring, dramatic cost cutting, and strategic slashing. Traditionally, PE firms bring financial discipline and strategic clarity to firms they acquire. Leaders were driven by short-term profits and rapid action to flip the organization.

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Stop Focusing on Profitability and Go for Growth

Harvard Business Review

And the average long-term ROE is more than 25%, reflecting improved efficiency combined with greater reliance on financial leverage at most companies. For the average company, defined as the equity-weighted average of the roughly 1600 companies comprising the Value Line Index, the cost of equity capital is just 8%.

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