The barbarians are again at the gates. The announcement this week of the largest ever private equity buy-out of a public company – the $45bn takeover of TXU, one of the largest utilities in the US, by Kohlberg Kravis Roberts and Texas Pacific Group – confirms the trend. To its defenders, private equity makes companies more efficient. To its attackers, its practitioners are financial manipulators and asset-strippers. So who is right? An obvious answer is that private equity is a growing activity in which willing sellers meet willing buyers. If it prospers, it must be profitable. If it is profitable, it should also be adding value. Where private equity finances start-ups or small and medium-sized companies, few would question this argument. The taking private of well-known public companies with huge numbers of employees is a different matter. Why, though, should the benefits of such deals be doubted? Do they not also fall under the broad category of beneficial transactions? To this there are three answers. The remainder of Martin Wolf’s column can be read here (FT.com subscribers only). Discussion from our guest economists is free.