FT News Briefing Private equity now says sharing is caring
May 30, 2024
NATO is alarmingly equipped, managing only 5% of the air defenses required for Eastern Europe. Meanwhile, Israel bonds are gaining traction among U.S. municipalities, showcasing a unique investment landscape amid ongoing conflicts. Private equity is pivoting towards profit sharing, shifting focus from austerity measures to boosting employee engagement. This change comes as rising interest rates complicate traditional debt management, prompting firms to rethink strategies while tackling challenges in sectors like orange juice production.
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Private Equity’s Pivot to Profit Sharing
- Private equity firms are shifting towards profit-sharing with employees.
- This change is driven by rising interest rates, making debt-heavy acquisitions less profitable.
Profit Sharing as a Motivational Tool
- Motivate employees and improve company performance through profit-sharing.
- Align employee interests with company success to generate more revenue and enhance profitability.
Impact of Interest Rates on Private Equity
- Higher interest rates impact private equity's traditional debt-heavy acquisition model.
- This shift towards profit-sharing may become a lasting trend, even if interest rates decline.