To the Editor:
I agree with Tim Leuliette's Oct. 22 column ("Suppliers: Need capital? Go to Asia"), with one major exception -- the role of U.S. private equity firms.
There are more than 2,000 significant private equity firms in this country, each with an average of about 10 companies in its portfolio. That's 20,000 U.S. companies waiting to be sold in five years.
Who is going to buy them? It will be just like the present glut in the housing market.
Private equity is not a long-term strategic solution for most U.S. auto suppliers; it is simply a stepping stone to a future different ownership.
Leuliette is right; regional U.S. players will not survive. If suppliers need capital, they should consider being bought by an Asian partner today (like Metaldyne and Asahi Tec) and not go through the pain of interim private equity ownership.
Our firm is focused on buyers in India. In the first eight months of this year, Indian companies acquired 164 foreign companies in deals totaling $30 billion. Sixty-eight of those deals were in the United States.
Indian companies have cash; they are willing to pay high premiums for good companies, and they are good to work with. Other Asian buyers have similar attributes.
What's better for a CEO or any of his co-workers: to be a respected employee in a successful global business (albeit foreign-owned) or to be one of the walking dead in a doomed regional business?