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Private equity rules

It happens every couple of years. An eruption of dismay over foreign takeovers of prized British companies. Prized is the wrong word – often it’s because they are not prized that they become prey. But they are usually treasured (Boots or Cadbury’s), significant (water companies, airport owners and power providers), a source of pride (ARM Holdings) or of importance to national security – for example, Ultra Electronics, now potentially a target for defence group Cobham, itself the subject of a highly controversial takeover by US private equity firm Advent International in 2019.

While it’s harder to get worked up about a 500-store and freehold property-owning supermarket chain, no doubt the fear factor around private equity is making this an unnerving time for many of Morrisons' employees, and for its suppliers who may be apprehensive about a more aggressive approach to the prices they are paid.

Private equity hunters, descending it seems in droves now they can smell the odour of undervaluation, have a terrible reputation for asset stripping and loading up their purchases with debt for the next owner to sort out. Somehow even though private equity is playing by the rules, what the public see is plucky little companies unfairly pitted against stony-hearted predators who turn up armed with their lethal weapon of highly leveraged debt.

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