Mannerisms

Particularly suspect is the 10 per cent tax paid by executives on their slice of profits from a deal. The ten per cent rate for capital gains is a concession by the Inland Revenue given to encourage entrepreneurs.

The justification for the 10 per cent tax-break on a capital gain is that entrepreneurs are putting their own private capital at risk. Executives in private equity funds are not putting their own money at risk, so should not be entitled to the 10 per cent rate, nor should a share of profits from a deal involving the company’s capital be regarded as a capital gain for an executive.

The committee has also called for a closer look on the non-domiciled status claimed by something like 80 per cent of all partners in private equity companies in an attempt to avoid paying tax.

You have to ask why people argue that we shouldn't be nasty to private equity companies because, if we are nast to them, they will decamp elsewhere. If they’re paying hardly any tax here, who the heck cares where they decamp to?

Meanwhile the Treasury Select Committee looks at one negative effect of private equity deals in that they load up the companies they take over with huge amounts of debt.

"Higher levels of leverage are likely to create additional risk”, said the committee’s report, "we also note that the recent increase in the number of highly-leveraged private equity-owned firms has occurred during a period of economic growth and stability, which is not guaranteed to continue."

And that’s a pretty apposite remark as the credit crunch hits the banks which have funded recent private equity deals. The banks which funded KKR’s buy-out of Boots have given up attempts to sell £5 billion worth of debt to finance the deal.

Presumably that’s because higher interest rates, and tighter loan conditions, have meant they will lose any profits on the original buy-out deal if they sell the debt on currently available terms.

More of a worry is that Man United is thought to have given up trying to re-finance its £660m debt.

Could Wayne become a casualty of the global credit crunch?