I read with interest the article (Recruiter, 8 August) on the interaction between private equity and the recruitment sector: 'Is buy-out bonanza set for blow out?'. There is no doubt that the spotlight on the private equity industry will continue. In particular, it will be interesting to see how the recommendations of The Walker Report are implemented and whether the tax regime, under which private equity firms operate, will change.

However, the importance of private equity to the overall success of the UK economy and the growth of entrepreneurial organisations, as well as much larger enterprises, cannot be overstated. Private equity firms are an excellent catalyst for both change and growth — they cannot and should not be criticised for helping to run businesses more efficiently. They are focused on making money efficiently, but aren't all businesses within a capitalist society? As one of the contributors suggested, recruitment is not an industry where asset stripping is possible.

Private equity will continue to show strong interest in a sector where high quality individuals in attractive niches can create significant value. One issue of caution, however. In the current market climate, the credit committees of the banks will be more conservative in their lending to private equity backed situations. The impact of the economic cycle will be top of the list in reviewing opportunities in the recruitment sector. Businesses with long-term, contractual relationships will be at a premium.

High growth, strongly cash-generative businesses with little capital intensity will always be attractive. The recruitment sector is very much here to stay as an area of interest for the private equity community.

l David Silver, managing director and head of business services, Baird