By Jorn Madslien BBC Business reporter, CBI conference, London

Mr Schwarzman says the private equity industry is misunderstood

"Private equity is here to stay as a force, and as a force for good, in the world economy," according to one of the biggest players in the industry, Stephen Schwarzman.

Alas, the more familiar portrayal of the industry as a gathering of callous investors prepared to asset-strip companies and axe workforces in pursuit of a quick buck is unfair.

"Most of the attention has been unremittingly hostile and devoid of factual content," insists Mr Schwarzman, who is chairman, chief executive and co-founder of the world's largest buyout firm, The Blackstone Group.

But not all the executives and entrepreneurs at the CBI conference in London agree with Mr Schwarzman's sense that the industry has been treated unfairly.

Some 45% of the conference audience feels the private equity industry has deserved hostile treatment by the media, while the remaining 55% feels it has been unfair, according to an interactive survey.

Moreover, a third of the audience feels the negative coverage of private equity firms has had a negative impact on the reputation of business as a whole.

Long-term investors

Mr Schwarzman is eager to rebuff some myths about private equity investment.

The big question is; what kind of capitalism do we want? Will Hutton, The Work Foundation

"Our industry has been guilty of telling our story badly, if at all," he says. "That has to change."

Contrary to popular belief, the private equity industry sticks with its investments longer than investors who buy shares in listed companies, according to Mr Schwarzman.

"This 'flipping thing' you hear of, it just isn't the case," he says. "In private equity, we're not prisoners to quarterly earnings.

"At Blackstone, we typically hold an investment for five-and-a-half years."

By contrast, the average stock market investor holds stock for 10 months.

Deal-driven capitalism

The argument is partially accepted by Will Hutton, chief executive of the think-tank The Work Foundation, who agrees that stock market investors might lack commitment to the companies in which they buy shares.

In every business I've worked in, people follow the money Tim Parker, former chief executive of The AA

But Mr Hutton also believes private equity investors have merely taken advantage of the way such relatively disinterested investors have created an "ownership deficit" that has made "hostile takeovers too easy and resistance too hard".

"The big question is; what kind of capitalism do we want?" he says, questioning whether the benefits from private equity investment have arisen from operational performance improvements, or merely from a form of deal-driven enterprise that relies heavily on financial gearing.

By loading too much debt onto the companies they acquire, and by limiting their focus to financial returns, private equity investors are losing sight of what he describes as the "moral purpose" of business.

"Why is the people-side of private equity so reliant on incentive schemes?" he asks.

Motivating workers

The answer is simple, according to Tim Parker, former chief executive of The AA.

3i's Philip Yea says private equity contributes to the UK economy

"In every business I've worked in, people follow the money," he says.

But whereas "incentives are a good thing, they are not the only thing", he adds.

"People are also encouraged to be responsible and be valuable in their job. You have to get your employees on your side."

Mr Schwarzman agrees: "You can't have a successful company without successful workers enjoying their jobs and doing them well."

Lack of transparency

Motivating staff may become an increasingly important task for the private equity industry, which according to estimates made by the private equity panel at the CBI conference employs between 8% and 18% of all private sector workers in the UK.

Such estimates make it sound as if these investors are of vital importance to the UK economy, though the same panel's estimate of the industry's contribution to the UK's gross domestic product (GDP) suggests otherwise.

The industry contributes about 1.3% to the UK GDP, compared with just 0.6% in Europe, according to Philip Yea, chief executive of private equity firm 3i Group.

Industry insiders reciting such seemingly contradictory statistics is symptomatic of a crucial challenge to an industry that remains veiled in secrecy.