Buyout blow-ups

It’s a now-common tale. A market takes a sharp turn for the worse and hedge funds start popping like soap bubbles. The current credit crunch has punctured funds managed by Bear Stearns, Sowood and Macquarie, among others. Are private equity funds next? Like hedge funds, buyout funds make risky, leveraged investments. One might assume that they, too, will soon be forced to own up to steep losses. But in fact it takes quite a long time for a private equity firm to «blow up». There are a couple of...