Private Equity also needs a host of tools to gather and analyse Business Intelligence. These include public records searches, news archives, legal proceedings, patent awards & applications and employees. It seems that PE Governance relies strongly on elaborate processes and ruthlessness. The discipline imposed by debt means that they are pretty conservative in their attitude. It also means that it can be extremely difficult for an entrepreneur working with a PE firm to find breathing space. PE firms simply have too much money on stake and hence need strong internal controls, auditing and monitoring. An entrepreneur, on the other hand, lives to be free. PE firms provide an effective alternative to governance by boards. Nevertheless, it may prove to be more effective for mature firms rather than start-ups. Moreover, since PE firms must focus on returns, I wonder what stops them from milking a company dry in 10 years and leave the rotting corpse for anyone who wants it. I am, therefore, a bit sceptical about PE model being the best one, especially for start-ups. Or perhaps I am missing details about operations of firms that specialize in start-ups. Either way, there is much to learn.
