Private Equity Firms: Who Benefits?

Private Equity firms: Who Benefits?
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Private Equity firms: Who Benefits?
Both the American Investment Council (AIC), comprising of members of the Private Equity (PE) industry and a section of the members of the Congress, such as Massachusetts Senator Elizabeth Warren, have raised strong opinions about the benefits of PE. While AIC maintains that PE is critical to the development of the US economy, Warren and other Congress members are largely concerned about the regulation of the industry to monitor its operations (Warren, 2019). A bill is underway to fundamentally change the PE industry, but AIC and its members will likely do their best to stop the enactment of Warren’s proposed “Stop Wall Street Looting Act.” As Americans witness this standoff, it is important to understand the working mechanism of Private Equity and its real beneficiaries.
The AIC explains that PE plays an important role in the US economy by investing in companies that need to raise capital to grow or restructure. By doing this, PE benefits average Americans, investors (limited partners), and communities, and workers through the creation of 8 million jobs across the country (American Investment Council, 2020). Contrary, members of Congress such as Elizabet...