Managing in the World of Private Equity: Financial Engineering is "Out," Nurturing Businesses is "In"

Our second installment from the Tennessee ACG meeting panel, hosted by FourBridges managing director Andy Stockett, discusses a transition away from private equity's early days of "financial engineering," and a growing reliance on generating returns by improving operations.

In the past, private equity firms were known for financial engineering: companies acquired by private equity investors were broken down, sold and restructured, with the singular goal of gaining returns. But the private equity industry would like to say this is ancient history. According to private equity panelist Matt Lane, the portfolio companies that turn out to be great investments are the ones where a PE firm is "backing a management team and working with a management team to grow the business."

Watch the video below to hear the whole conversation.