Report calls for more transparency for private equity firms

18 July 2007

Leveraged buyout (LBO) firms should be more transparent in their dealings and be prepared to give greater information about deals, according to a review of the sector conducted by a British City banker.

David Walker of Morgan Stanley has been conducting the review over a five-month period having been commissioned to do so by the banking industry in a bid to circumvent increasing pressure for greater regulation of the area.

Mr Walker said: "The industry has come to be seen as needlessly secretive, feeding suspicion and in some quarters close to hostility…there is thus a major transparency and accountability gap to be filled."

In response to the study's findings, he has posited that the industry should adopt a voluntary code of conduct, under which private equity companies would issue annual reports and statements online within a four-month period of the year-end and would provide details of their balance sheet management.

The report did however stop short of recommending that legislation is required to bring about a change of approach in the LBO sector, with Mr Walker arguing that such measures would create a "mess".

He added: "If we intervene in a fast-moving business like private equity and legislate, it's very hard to change at a later stage.''

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