If I personally purchased a business as an investment, for wealth creation and as some sort of plan to create passive income, I would want to know it inside-out. I would hope to have access to every scintilla of data available, and even the data unavailable. I would expect to know the people personally, to know the advisors (finance, legal, etc) and be able to recite the key drivers of the business and their latest metrics. This isn’t an obsession, it’s just par for the course considering the obvious consequences of relinquishing control of such an important asset.

I attended a private equity conference recently and spoke with a number of general partners, mostly just idle chatter, but also a tête-à-tête or two on the topic of investees. I was somewhat startled to hear GPs forgetting the name of their investee’s CFO, or not knowing whether revenue last year was $300m or $400m, or not being sure whether an investee has an online e-commerce presence. There could be many reasons for this; I just hope it’s not a sign of what’s to come. By this, I mean private equity continuing the trend along financial engineering and not doing much for the long-term value of companies with a lot of potential.