DAYS after a consortium of buyout companies provoked a storm by revealing its plans to take over J Sainsbury, one of the architects of the bid, Richard Camp-bell-Breeden of Goldman Sachs, was halfway up a mountain on a skiing holiday.

He was not alone in ducking the flak.

As an angry debate raged in Britain about the role and function of private equity, it emerged that most of the protagonists in the Sainsbury affair were holidaying abroad, apparently oblivious to the furore they had provoked.

In their absence, trade unions and opposition politicians mounted a vicious assault, accusing buyout firms of asset-strip-ping, slashing jobs, paying outrageous rewards to fat-cat bosses and turning their backs on corporate social responsibility.

Matthew Oakeshott, Treasury spokesman for the Liberal Democrats, summed up the mood: “The Sainsbury’s takeover bid is high noon for private equity. It raises grave competition and public accountability issues.

“If asset-strippers take over Sainsbury, Tesco’s grip on British retailing will tighten overnight. Then private-equity players will no longer be the elephant in the room, they will be charging down Britain’s high streets.”

By the end of the week it was clear a tipping point had been reached.

Campbell-Breeden maintained a discreet silence. But one by one, other leaders of the private-equity groups, often secretive individuals with a lofty disdain for popular opinion, began to engage in the debate.

Sensing the danger, they came into the open to argue that private-equity was a force for good, reviving moribund industries, increasing employment and providing decent returns to its main investors — pension funds.

Damon Buffini, boss of Permira, Europe’s biggest private-equity firm, which has been pilloried for cutting jobs at the AA and Birds Eye, took the first step by agreeing to meet union leaders. Stephen Schwarzman at Blackstone has also agreed that a company delegation will meet trade unionists.

Martin Halusa, chief executive of Apax Partners, admitted last week: “We have been hiding ourselves. But only 10 years ago this was a tiny industry and no one was interested in us. We were exotic. The interest has only happened in the last three or four years because we can buy mean-ingful companies.”

Halusa said the political outcry has taken the industry aback.

“It has come as rather a shock to realise we are of public interest,” he admitted. “All of a sudden we are faced with this wall of ignorance and it has left everyone scratching their heads.”

Private-equity firms earned the nickname “Barbarians at the Gate” after the 1988 buyout of RJR Nabisco. Ian Armitage, partner at HgCapital, says private equity has since become a “useful whipping-boy”.

“But we should not complain, we should explain,” he said. “It’s our responsibility - we are not looking for sympathy.”

He insists private equity has a good story to tell. “The discipline of private equity makes companies fitter, leaner and better able to compete.”

Buying out companies and giving incentives to the existing management through shares and bonus schemes is another “magic factor” that delivers success. “If you do that, people in charge of the company don’t act like agents, they act like owners,” Armitage said.

Schwarzman argues that private equity creates employment and delivers faster growth.

But statistics on job creation in the private-equity industry reveal a mixed picture.

Figures from the Centre for Management Buyout Research show that management buyouts - where the existing management team has taken a business private backed by private-equity finance - typically lead to an initial cut in the workforce; but after four years there are on average 21.4% more jobs than before the deal.

By contrast, in the case of management buyins - where private equity installs new management to take a firm private - there is a dip in employment that gradually reduces over time; but four years after the deal, the workforce is 3.35% smaller.

Jon Moulton, founder and managing partner of Alchemy Partners, cautions that it is difficult to get accurate statistics about job gains and losses in private equity because often firms that go bust are not included.

One private-equity executive said: “No-one questions conventional takeovers and mergers. No-one says Thomas Cook shouldn’t merge with MyTravel because it will lead to redundancies.”

Permira came under fire for jobs cuts at the AA and Birds Eye, but it points to other investments where jobs increased. At New Look, the fashion chain it acquired in 2004, the workforce rose from 12,000 to 15,000, while capital expenditure grew from £99m in March 2004 to £230m at December 2006.

Getting this kind of information about successful investments is relatively easy - but critics argue that obtaining detailed data on private-equity-owned businesses that are struggling is much harder.

One of the most vocal critics of private equity is Philip Jennings, general-secretary of the trade union grouping Union Network International. “The private-equity firms consider themselves basically untouchable. They are distant, arrogant and secretive,” he said.

“This is not just a domestic storm in a teacup — there is a general weather storm headed for private equity.”

Blackstone’s Schwarzman believes the critics do not understand the difference between private equity and hedge funds.

“Private equity buys an entire company, develops a management plan and improves the company and owns it typically for three to seven years. It then sells it or takes dividends by refinancing it.

“Hedge funds typically buy stocks or derivatives with no management control for time-frames that range from less than a day to several years, during which time they maximise profits. If it goes wrong they can just sell out.

“There is a completely different sense of stewardship and custodianship in private equity compared with hedge funds.”

The debate about private equity has become wrapped up in the row over executive pay. But Schwarzman insists that, unlike with many listed companies, pay in private equity closely correlates to investment success.

“If you see people making large amounts of money, that is after they have invested their own cash; the business then has to perform well and then it has to be taken public or sold.

“It is not just straight cash compensation - unlike in a listed company. It is an opportunity for the management, but if they do not succeed, their own money is trapped in a deal with mediocre performance.”

Sir Digby Jones, UK skills envoy and former head of the CBI, says the pay row is imbued with the “politics of envy”.

“Waging a political campaign against the activity of private equity will only make it more difficult to do business in Britain. It is an awful discouragement for very clever, very successful people to come to London. It is the financial capital and we want to keep it that way.”

Jones says that private equity helps Britain remain competitive with the emerging economies of China and India.

But he concedes the companies need to change public perception. “If private equity wants an understanding society in which to invest, they have to be seen to be good corporate citizens,” Jones said.

Private equity has benefited from extremely benign economic conditions during the past five years but the economy may not be this kind forever.

“We have enjoyed an exceptionally favourable combination of circumstances under which private equity has set to work — low interest rates, high liquidity. None of those conditions will last forever,” Richard Lambert, head of the CBI, said last week.

With the challenge of more testing economic conditions ahead, private equity knows full well that unless it can persuade people of its virtues, it will struggle to buy prestigious businesses such as Sainsbury.

When the barbarians return from the mountain tops this week, maintaining an icy silence will no longer be an option.