Long Term vs. Short Term...Where's the Payoff?

Posted By: Karen Fisman

How do they do it?  In last week’s Valitas Insights article, we reported that the U.S. middle market is experiencing record levels of employment and revenue growth, but private-equity (PE) owned firms are way out ahead of the pack.

So again, how do they do it?  We’ve previously discussed several factors underlying this outperformance, but a recent Harvard Business Review (HBR) article raises an additional compelling explanation.  The article is aptly titled Finally, Evidence That Managing for the Long Term Pays Off (leaving no doubt about its contents).  The authors contrast results generated by companies with a long-term outlook with those focused on “short-termism” - that is, a focus on quarterly earnings.   PE firms, with their longer investment horizon, are a closer match to the former camp.


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