So what exactly is private equity?

Following a US accounting rule change in the (northern) autumn of 2007, PE consortium members must mark down the value of an investment in any quarter it drops. Freescale's new owners (a syndicate that includes insurer AIG and Singapore’s Government Investment Corporation) recently wrote down their US$7 billion equity stake by a whopping US$1 billion.

Freescale was in good company. Kohlberg Kravis Roberts, another big name in the PE galaxy, purchased chipmaker NXP Semiconductors (previously the semiconductor unit of Royal Philips Electronics) in 2006. Recently KKR marked down its value by 14 per cent. Bonds of First Data, a $27 billion KKR investment has seen its value take a 16 per cent haircut. And it was only bought last September!

The new owners replaced Freescale’s CEO, Michel Mayer with Richard M. Beyer, formerly of California chipmaker Intersil. As a former officer in the United States Marine Corps when serving his PE masters, Beyer will no doubt be mindful of the Corps’ motto, Semper Fi (always faithful). Faithful to creating value is, after all, what everyone’s hoping for. Everyone, from the investment bankers - hoping for a handsome return on their investment -all the way to the junior office clerks - who pray their jobs are not at risk.

In addition to the hard nosed economic and financial principles outlined by Gadiesh, an essential - but inevitably random - component in any PE investment, or for that matter, any of life’s endeavours, be it marrying well, winning on the horses or even getting a good table at a restaurant, is luck. And luck can be either good or bad. Luck is one thing you sure can’t plan for.

It’s telling that Freescale was bought by the Blackstone-led consortium only after a short scuffle with another PE consortium that included KKR, Apax Partners and Bain Capital.

And who said losing a fight must be considered as bad luck?