The chapter will proceed in five parts. First, I will attempt to describe the world as managers of private equity funds as well as some of their critics see it. Second, I will summarize the structure and mechanics of PE funds, including the importance of leverage to their success. Third, I will discuss what I have referred to here as the separation of ownership and control problem, including its modern formulation as an "agency" problem, first clearly formulated by Berle and Means. Fourth, I will critically assess the "counter-attack" on PE funds from labor and the left, which I believe is wrongly rooted in the concept of "financialization." I will conclude with an attempt to summarize what I consider to be the "real" nature of private equity.
Stephen F. Diamond, Beyond the Berle and Means Paradigm: Private Equity and the New Capitalist Order, in The Embedded Firm Corporate Governance, Labor, and Finance Capitalism 151 (Cynthia A. Williams and Peer Zumbansen ed., 2011)