Caveat Emptor!

 

I learnt that Latin saying before I even studied Latin - "Let the buyer beware!"

In other words, check what you're buying before you buy, and today's Herald raises an excellent point: if you're buying shares in a Private Equity Fund float, make sure you caveat (beware) the hell out of them before you become an emptor (buyer).

There are numerous examples of dodgy dealing by private equity firms, and Dick Smith is just one of them. People with working memories will also be able to recall an Australian PEF causing the downfall of a century-old NZ retail icon just a few years back. Many people forget that the sole reason for the existence of a private equity firm is to make money. Accordingly, if they're selling something, by the very nature of PEFs you ought be able to determine it's a bad buy. If it were a good buy, a PEF will be buying, not selling.

When new IPO shares appear, if a private equity firm is doing the selling, just don't buy it - you cannot get value from it.

 

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