In recent months, a burgeoning number of pink page column inches have been given over to the role of private equity firms and their seemingly unquenchable thirst for bigger deals, their insatiable desire to acquire larger companies and their relentless pursuit of higher profits.

Private equity firms have become the new princes of the City, bestriding the Square Mile on a constant lookout for quoted companies likely to provide jackpot-style returns for everyone involved, should an acquisition prove successful.

Some investors, alert to this and the private equity sector's ability to borrow enormous sums of money in order to fund their ambitions, have started building positions in quoted companies that could become takeover targets.

The strategy is akin to the actions of carpetbaggers who opened myriad accounts with building societies a decade or more ago in the hope that they would go public.

In terms of returns on investment, private equity firms have outperformed the UK public equity market by an average of 8.5 per cent over the last decade.

In Europe, the returns have been even higher, averaging 11.2 per cent. The attractions of private equity firms to a limited number of investors are obvious, but why is their performance so impressive?

Consulting firm McKinsey believes there are a number of reasons why companies appear to do remarkably well when taken private.

First, equity houses tend to buy into buoyant economic sectors where constituent companies are likely to appreciate in value anyway - ie their pre-bid analysis has a habit of being uncannily accurate.

Arbitrage can also play a big part in making a deal successful, as the current Sainsbury's bid may prove.

Sainsbury's property portfolio is valued in the books at £5.5bn, although the open market value is believed to be nearer £8.2bn.

Using the property's full value to borrow more (relatively cheap) money could net a private equity firm a fortune.

Interest rates may have risen recently but debt is still comparatively inexpensive, which means that private equity houses tend to borrow as much as they can to develop businesses in the relative short term.

They then use the free cash flow to pay down debt, thus enjoying a resultant increase in equity value.

Several industry experts have expressed the need for private equity houses to be more cautious as interest rates have edged upwards.

Nevertheless, the ready supply of cheap debt and of wealthy private investors is not only supporting, it is now driving levels of buyout activity.

Last month I saw a list of this year's possible buyout targets; depressingly, it included three companies which I consider to be long-term holdings.

Is a possible takeover sufficient cause for concern? It is for me. Like most private investors, I only take my final investment decisions after due consideration, a process that takes time researching, comparing and estimating.

I don't want to sell my Vodafone, BT or Lloyds TSB shares. I'm in there for the long run, to re-invest dividends, watch the company's share price grow and, as Warren Buffet famously said, to "get rich slowly."

I cannot knock people who carpetbag, but well-established investors who gleefully take private equity's gold are being a tad short-sighted, because where are they going to put the proceeds - under the bed? Mr Buffett would not approve.