Bain Capital Partners paid US$1.76 billion for American Standard's bath and kitchen business.
`EXIT STRATEGY'
"Private equity has created an exit strategy for parts of portfolios that are not attractive to strategic buyers," said Poses, the Trane chief.
Moreover, the specter of a deep-pocketed equity firm waiting to pounce can tip management into sloughing off divisions they might otherwise have held.
And private equity firms no longer simply buy up companies, cut costs and flip them back to the public markets. Many private firms now buy along a theme: They snap up assets, roll them up into huge companies -- think Wilbur Ross and his steel, coal and textiles companies -- that they manage for years before they take them public.
"There's been a real migration from the old private equity firm that was managed by the numbers. Today's private equity companies are the new conglomerates," Harrigan said.
If true, they may face some challenges of their own. Management experts, and a growing number of chief executives themselves, are conceding that even the smartest people become distracted if they are pulled in too many directions at once.
The main reason Blake decided to sell Home Depot Supply was that he wanted to tinker with product mixes, expand to new markets and experiment with new store formats. In other words, he wanted to concentrate on the stores.
"It was a question of focus," he said. "Supply would have diverted too much attention and resources that had to go to retail."
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