News

Research of private equity buy-out company practices is exposing what regulators have been over looking in the interest of free market and not in the interest of society. The gross imbalance of benefits for these private owner-employers is beginning to be uncovered. UNI Global Union encourages research that will help to bring private equity buy-out practices out of the shadows and into the spotlight of regulators.



We wish to draw your attention to a new report released by the Investor Responsibility Research Centre on governance practices in private equity portfolio companies. This report presents significant information and should be distributed widely, particularly at a time when regulation can be improved in the wake of the financial crisis.



People who should take note of this report:

-workers in private equity owned companies,

-pension funds investing retirement funds of workers in private equity,

-unions battling to get labour standards from potential private equity bids on companies,

-members in the European Parliament who will consider the newly released Alternative Investment Fund Managers (AIFM) directive.

-G20 countries who are currently examining alternative investment in the wake of the crisis.



The report:



Governance Practices Found to be Lacking at Companies Bought Out by Private Equity Firms

http://www.irrcinstitute.org/projects.php?project=38

New study commissioned by the Investor Responsibility Research Center (IRRC) Institute and conducted by The Corporate Library. The full text of the report is available on the IRRC Institute Web site.



“What is the Impact of Private Equity Buyout Fund Ownership on IPO Companies’ Corporate Governance?” finds that companies backed by private equity buyout funds were more likely than others to have classified boards, poison pills and restrictions on director removal by shareowners. The report also notes that lucrative consulting agreements for former executives, generous employment agreements and special bonuses are significantly more common at private equity buyout backed companies. Finally, the analysis indicates that executive compensation at private equity backed companies tended to be higher, less performance-related and less at-risk than at comparable companies that did not have private equity sponsorship.