There is a myth that when a company is acquired by private equity, the ulterior motive is to get a return on investment as fast as possible by any means necessary.
In that vein, Automotive News' sister publication Crain's Detroit Business recently ran a story about auto suppliers that raised concerns that carmakers should have reason to be skeptical when private-equity companies acquire suppliers in the industry.
Sources for the article suggested that privately purchased, debt-laden suppliers might scrimp on future r&d budgets to bolster the bottom line. Others worried that newly installed, tight-fisted CEOs would resist perennial automaker calls for price reductions or boldly turn down future business that might prove to be unprofitable.
Further, there was the "barbarians at the gates" implication that private equity teams are not really in the automotive industry and that their commitment to the car business lies only in quickly making a given company profitable and reselling it to the highest bidder.
From my perspective as the president of Key Plastics and a senior vice president of Carlyle Management Group, which purchased two major suppliers - Key Plastics and Breed Technologies (pending) - any broad-brush attempt to paint private investment in such a one-dimensional manner is misleading and inaccurate.
While examples of private equity taking a shortsighted view of ownership certainly exist, our management group has a different take on how companies, including automotive suppliers, can be run successfully and profitably.