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It is NOT the L Word; The pervasive success of small deals isn't driven by luck, or even leverage.

Article Excerpt
Byline: Stewart Kohl and Bela Szigethy

Private equity is dead meat. Whether it's new regulations and tax treatment, a wave of bankruptcies by PE-owned companies, tightening credit, or a backlash against perceived greed and excess in our industry, some people may feel that private equity has outlived its usefulness. We're happy that some aspects of this are true; the industry needed to change and certainly couldn't keep up the pace of the heady days driven by easy credit. But we're happier that rumors of private equity's demise are exaggerated. In fact, our industry is providing guidance, know-how and capital that greatly benefits our investors, portfolio companies, and, by extension, the broader economy.

A smaller private equity industry will emerge from this tumultuous period. Those firms that survive will truly be the fittest - correctly focused on value creation and able to raise capital when it is scarce. The middle market and the mega funds need new investment strategies and new routes for value creation. Given the intelligence of the leadership of these firms and the stakes involved, we're sure they will emerge,...

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