How do alternative asset managers change the short-term mindset and enhance growth?
It is important to understand one overarching truth about private equity: The entire investment hinges on improving the business and increasing its value. If the alternative asset manager fails to do that, it loses its own money, its investors lose their money, and its ability to raise future funds is undermined. The essence of alternative asset management is the alignment of the interests and incentives of the management with that of the owners. That is the reason why Carlyle usually requires the management of companies we buy to invest their own money into the company so they have a vested interest in its success. Carlyle and other alternative asset managers also enable companies and the management to have a sharper focus on how capital is allocated across the business – without the constant pressure of delivering quarterly results to public shareholders. Shareholders and their company managers have a single objective: Grow the company’s value. Thus, they can make business decisions
