The merits of the private equity model

by Catherine Woods - Monday, 17th December 2007 -

“In one sense, the private equity model is much more transparent than the public company model,” argues Neil MacDonald, the FD of AES Engineering.

He should know. MacDonald was FD of Firth Rixson, which makes rings, forcings and metal products, when it was bought by private equity player the Carlyle Group.

“I love being in a public company,” MacDonald says. “I love talking to the analysts and being in the City. We’d done an awful lot with Firth Rixson when it was public but when the market is down, you’re snookered into where you can go. There wasn’t much we could do so we went down the buyout route to gain better access to funds.”

MacDonald stayed in the £500m business until Carlyle decided to exit. He toyed with the idea of semi-retirement but instead joined AES, a mechanical seals company, as FD. The role was initially part-time but was beefed up to a full-time position in October.

Also during that month, private equity firm 3i increased its minority stake in the business to value AES at £100m. MacDonald was very involved in the deal and he hopes it will take AES to the next level.

“3i has a significant minority stake and that gives us access to a global network. It’s the next stage of development for AES. It ramps up the professionalism of the company and makes the board stronger.”

Picture source

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