By Martin Okner
Private equity has become such a hot topic since the 2012 election that candidates have actually created a playbook to try to defeat anyone running against them for public office who was involved with private capital investing. A recent article in Politico did an excellent job highlighting the various running plays and play action passes in this playbook, which provides a unique opportunity for the PE industry to respond – and the truth always prevails.
Digging up failures is a sure-fire way to make headlines because vilifying an industry often piques the interest of journalists. Failures are also a part of any successful company’s history: remember New Coke? Yet unlike large consumer brands with entire marketing teams dedicated to developing a unified and coherent message to rebuild and enhance the equity of their products among a broad population, private equity is a fragmented industry and has often tried to avoid the press.
Funding PR and advertising campaigns to enhance PE’s public image can be expensive, and the industry is engineered to be as efficient as possible with the limited partners’ money in order to maximize returns. Limited partners are often pension funds that rely on the higher returns private equity tends to generate than other investment vehicles, this is so that middle-income workers can retire and provide security for their families as they age.
It is time for the industry to band together and create one voice. Now that we know the playbook, let’s start using our facts to block and tackle, and eventually advance. Unlike the individuals who benefit from vilifying the industry, we have the facts.
Let’s have some fun with this and lob a few questions over their bowline as a start. For any candidate running for office who worked in private equity, we have the PE playbook for you. Go to growtheconomy.org and see how companies backed by private capital grew jobs by 64.4% between 1995 and 2010 whereas all other companies grew jobs only 18.3% during that same time period. Drill down to your district and ask your opponent to respond to that!
Research facts from the National Center for the Middle Market and see how middle market companies (many who are private equity backed) provided U.S. citizens with 2 million incremental job opportunities 2007-2010 while most other companies were laying people off. Ask your opponent how much money public companies and financial services companies in their districts or states paid in regulatory costs during that time period, which could have been invested in new jobs or in greater profits. Either would be accretive in tax revenues.
We can also come up with a few emotional stories too. Let’s have employees from the companies backed by private equity explain how they finally saw a future for themselves and their families because the company returned to stable ground or experienced extreme growth. Let’s ask our opponents to pro forma what the U.S. economy would look like without private capital and what would have happened to these families.
We may not advance immediately, but the truth will always prevail.
Martin Okner is the Managing Director, SHM Corporate Navigators and Chairman of ACG New York.