Regulation and governance

Regulation has pushed firms towards private equity.
FT.com :

"But supporters and critics of private equity agree on one thing: recent corporate governance regulation in the US has given buy-out funds a new edge there over publicly listed companies and their executives. The Sarbanes-Oxley law, passed in 2002 when the scars left by the Enron and WorldCom scandals were still fresh, requires that chief executives and board directors exercise stricter oversight of governance and audit processes.
Corporate executives protest that compliance with the new law, which has increased the risk of legal action against companies and individuals, is an expensive, time-consuming affair that dilutes their focus on company performance and strategy.
For their part, buy-out executives make no secret of their willingness to exploit the current climate to tempt companies and executives away from public markets. “We have a great corporate governance advantage,” says Kevin Conway, managing partner at Clayton, Dubilier & Rice, the buy-out firm. “Our board members are much more focused on driving the performance of the company than looking at processes.”"