A d d u c e n t

Following is something that I knew to be true just from my business experience but it helps when someone such as Robert Shapiro puts it to paper and backs it up with data from his research.  

I firmly believe that business buyers and investment firms, like the ones that I work with (that you can learn how to work and make money with too), will play a part in contributing to our economic recovery.  To be able work to help them play that part is very exciting and rewarding (in a number of ways).

Excerpt from: "The Role of the Private Equity Sector Promoting Economic Recovery"
by Robert J. Shapiro

About the Author

Robert J. Shapiro is the chairman of Sonecon, LLC, a private firm that advises U.S. and foreign businesses, governments and non-profit organizations. Dr. Shapiro has advised, among others, U.S. President Bill Clinton and British Prime Ministers Tony Blair and Gordon Brown; private firms including Amgen, AT&T, Gilead Sciences, Google, MCI, Inc., SLM Corporation, Nordstjernan of Sweden, and Fujitsu of Japan; and non-profit organizations including the American Public Transportation Association, BIO, the Philanthropic Collaborative, and the U.S. Chamber of Commerce. He is also a senior fellow of the Georgetown University Business School, chairman of the Globalization Initiative of NDN, co-chair of the Climate Task Force and American Task Force Argentina, and a director of the Ax:son-Johnson Foundation in Sweden. From 1997 to 2001, he was Under Secretary of Commerce for Economic Affairs, where he directed economic policy for the U.S. Commerce Department and oversaw the nation’s major statistical agencies. Prior to that, he was co-founder and Vice President of the Progressive Policy Institute. Dr. Shapiro also served as principal economic advisor in Clinton’s 1991–1992 presidential campaign, senior economic advisor to Albert Gore, Jr. in 2000, Legislative Director for Senator Daniel P. Moynihan, and Associate Editor of U.S. News & World Report. In 2008, he advised the campaign and transition of Barack Obama. He also has been a Fellow of Harvard University, the Brookings Institution, and the National Bureau of Economic Research. He holds a Ph.D. and M.A. from Harvard, as well as an A.B. from the University of Chicago and a M.Sc. from the London School of Economics and Political Science.

I. Introduction

In the current financial market crisis and precipitous economic decline, the question arises of what role the private equity sector can play in addressing the attendant economic meltdown. The private equity sector has played no role in the profound problems and dysfunctions that produced the current capital markets crisis.  The leverage of the companies in which it invests has averaged 2.2 to 1, compared to up to 30 to 1 in the institutions whose failures triggered the crisis; the sector’s dimensions are too modest to trigger systemic effects, with the total value of all private equity holdings equivalent to less than 5 percent of corporate stocks.  Further, its investments involve individual companies across every sector of the economy rather than volatile financial instruments, and its terms of investment limit its exposure to the unanticipated developments now gripping financial markets.

For thirty years preceding this crisis, the private equity sector has achieved notable success in attracting investment and securing strong returns. Moreover, this success generally reflects a strong record of providing services highly-valued by the market, and many of the services could prove very useful in promoting an eventual economic recovery, including its success in identifying firms that, with changes, could achieve higher profits and providing those firms with new capital, advice and expertise, new
management, internal reorganization, and strategic acquisitions or sales that increase these firms’ sales and employment.

There is more to read but here's a quote from his conclusion:

"In conclusion, the evidence and data suggest that the private equity sector can play a constructive and positive role during the current recession and its initial recovery. The numbers of private investments typically rise during recessions and continue to rise during the initial years of recovery. Moreover, total private equity investments grow much faster during the initial year of recovery than overall business investment. There is also some evidence which may suggest that private equity-held firms create jobs during the initial stages of recoveries while employment across the economy continues to contract."

To read the complete report send an email to me and by reply email I will send you the report.