It’s a difficult question. There are so many significant misconceptions about private equity. Ask three associates in our firm this question and you may get three different answers, each of them defensible. The most common misconception is that a private equity buys a company only to take a fiscal chain saw to it, cutting off live limbs to optimize cash flow. This image is not representative of the vast majority of private equities. In fact in a number of deals we’ve facilitated or analyzed, profits have temporarily declined after private equity acquisition because of intensive investments designed to scale the acquired business. These growth oriented investments are often manifested in sales & marketing, production upgrades, geographical expansion, product & service diversification, research & development, strategic acquisitions… The vast majority of private equities are interested in growing the business they buy, not in disassembling or gutting them for a short term profit.