Whenever unabashed greed and large sums of money collide, controversy is sure to follow.

In the secretive world of private equity funds, specialist takeover vehicles that grew out of the 1990s recession and reached their zenith in the buyout frenzy leading up to the Global Financial Crisis, that's become par for the course.

Now they're preparing to pick over the carcass of Fairfax Media, the floundering former giant of Australian newspaper publishers, following a formal approach from TPG Capital to snap up the company's key assets.

At this stage, it's an offer bound for the scrapheap. At 95 cents a share, it's well below the market price and an offer only to cherry pick the company's best known businesses — The Sydney Morning Herald, The Age, the Australian Financial Review, along with its main growth asset, the Domain real estate listings business.

As for the rest — the New Zealand newspapers, the radio joint venture and Stan — the television streaming business Fairfax owns with Nine — TPG has kindly offered to allow Fairfax to retain them.

This is merely round one in what probably will be a protracted battle. Should TPG, or Texas Pacific Group, ultimately succeed with a higher or full takeover bid, it has vowed to protect the journalism.

That would be a turnaround. Private equity firms only ever are protectionist of one thing — that is maximising their earnings through ruthless cost-cutting and financial engineering.

Lessons from TPG, Myer controversy

To understand just how they work, and for an insight into the methodology of TPG, a casual observer could do worse than look at the outfit's adventures with department store Myer.

Back in 2006, as Coles Myer lurched from fiasco to failure, TPG in conjunction with some Myer family members stepped up to the plate, bidding $1.4 billion to take the loss-making department store off Coles' hands.

Most of the money it shelled out was debt. And in textbook style, within months of the purchase — which included Myer's prized Melbourne real estate — it had paid itself a whopping great dividend out of the proceeds of a massive sale that included about half the inventory sitting in warehouses.

During the next few years, TPG sold the real estate, reduced inventories and whittled down staff numbers, all of which had the effect of making the dour old retailer appear to have undergone a wondrous financial transformation.

In a stroke of brilliance and luck, TPG then took advantage of a temporary stock market peak on Melbourne Cup day in 2009 by relisting the company on the stock exchange.

Investors paid $4.10 a share for the company, after a brilliant marketing campaign that enlisted the help of supermodel Jennifer Hawkins whose statistics dazzled analysts.

For TPG, the sale was a bonanza. For investors, a disaster.

The shares never traded above the sale price, sinking from the moment they hit the boards and have been heading south ever since the float, trading yesterday around $1.

Shining a light into the world of private equity

Immediately after the float, TPG was embroiled in controversy and scandal.

The float delivered a profit of almost $1.5 billion. But the money immediately was transferred to several associate companies in the Cayman Islands.

The Australian Tax Office hit TPG with a demand for $678 million and attempted to freeze the company's bank accounts. But it was all too late. The loot was gone.

As it turned out, TPG's Australian offshoot didn't actually own the Myer shares it sold. It was merely an adviser to two other companies, NB Queen of Luxembourg and its parent, TPG Newbridge Myer, domiciled in the Cayman Islands.

The fight went on for years and while the ATO failed, it shone a light into the dark recesses of the world of private equity that some say forced greater disclosure on the industry.

For TPG, the Myer transaction may have been a triumph. But it left a sour taste in the mouths of investors that still remains.