Here's an article about the private-equity firm Blackstone's expected bid for Chrysler: http://money.cnn.com/2007/04/02/magazines/fortune/benner_blackstone.fortune/index.htm
It provides a candid discussion of exactly what value the PE firms bring to the table (Hint: It has nothing to do with "management expertise"). This is particularly relevant to the previous discussion on the Hertz buyout from Ford. -raghu. --------------------------------snip says Phillip Phan, a professor of management at Rensselaer Polytechnic Institute. "There are really two ways to make money. One is by cutting costs, rewriting pensions contracts, closing capacity and outsourcing to Asia and Eastern Europe, where the auto sales growth is anyway. Or you just sell off the assets and trim product lines." Yet if the ultimate goal is to break the company up, why doesn't DaimlerChrysler simply do that by itself? Private equity brings in money, banking relationships and a will to make difficult labor choices that the German parent could not make without upsetting operations in Europe. ....... Phan adds that in the case of a buyout, debt levels on Chrysler could reach a point that the company would technically be insolvent. This would allow the new owner to go to the government and ask it to take over pension contracts.
