When it comes to private equity, targets want reassurance,
governments want to meddle and firms themselves want
consistency of treatment. But it's rare for all three to be
able to compromise. What to do?
The onus is on national governments to collaborate. In the
UK, private equity houses have shown that they are willing to
cooperate. As Jeremy Hand, chairman of the British Venture
Capital and Private Equity Association, describes on page 6,
some UK private equity reports are now more thorough than those
produced by public companies.
The UK code of conduct has faced criticism, but it does
deserve praise. Yes, it asked for less substantive attribution
analysis than expected. Yes, it gave longer for annual reports
to be published than planned. But it was the first attempt to
codify private equity in the world, let alone in Europe.
And it is not afraid to review itself. The Guidelines
Monitoring Group (GMG) will independently review the code to
ensure that it remains relevant, something that was put under
pressure at the end of last month by Sir David Walker, head of
the committee that created the code.
He called for a lower disclosure threshold. Presently, the
code covers UK companies with more than 1000 employees that
were taken private for at least £300 million ($598
million). This will give the GMG food for thought. If it meets
this challenge, there can be no argument that the code is
This fluid regulation should be replicated on an
international scale. Admittedly, the level of regulation will
depend on political appetite, but this is a great starting
Otherwise more codes and regulations will start being
introduced in individual countries and inconsistency will
reign. Denmark has already announced a code and Germany is in
the late stages of planning legislation.
Implementing an international code sooner rather than later
would create a more standardised and simpler system.
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