Hardman & Co Research
Hardman & Co Research: The real costs of public vs. PE ownership
In this note, we use some high-profile, mainly hostile, bid situations to illustrate the "agency" costs that can be a material drag on the performance of a listed equities portfolio. The strong corporate governance embedded in PE limits such costs, allowing i) a long-term focus (with a through-cycle perspective), ii) shorter periods of operational underperformance, iii) reduced risk of non-financially motivated acquisitions, and iv) aligned managers' and shareholders' interests. While PE is resource-intensive, we demonstrate how PIP avoids agency costs - a material factor in it delivering market-beating, post-cost returns since inception.
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About Hardman & Co: For the past 25 years Hardman has been producing specialist research designed to improve investors' understanding of companies, sectors, industries and investment securities. Our analysts are highly experienced in their sectors, and have often been highly rated by professional investors for their knowledge. Our focus is to raise companies' profiles across the UK and abroad with outstanding research, investor engagement programmes and advisory services. Some of our notes have been commissioned by the company which is the subject of the note; this is clearly stated in the disclaimer where this is the case.
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