Private Equity and Purpose: How and when Private Equity leans into purpose

Private equity (PE) has dramatically increased its footprint on Western economies, including Britain. In just two decades, the industry has grown from $650 billion in assets under management (AUM) to £6.3 trillion. Supporters see it as a valuable source of economic dynamism, bringing focus and energy to the companies it acquires which would be unavailable in public markets and offering superior performance. Critics see it as a new form of raw capitalism, secretive and free to put the quest for short-term profit above any other consideration, saddling acquisitions with debt and cutting investment while extracting maximum fees and dividends along the way. Given the scale and growth of the industry, now challenging the primacy of the public markets, it is important to identify the conditions and circumstances where PE works well and where it works less well. This paper, focusing on buyouts that are the largest segment of private markets by AUM and concluding with a typology where PE does and increasingly will lean into purpose as a business driver, is an attempt to do just that.