PE Suddenly Press Shy?
June 8, 2010
Is it just me, or has the attention from Washington suddenly made private equity press shy? I've spoken with a handful of GPs in the past few months, who no longer have any interest in publicizing their acquisitions. PEHub actually commented on this late last year, when it reported that a large firm had effectively gone into stealth mode on a handful of smaller deals.
I hadn't thought much of it, until I was denied a press pass to this year's Super Return US conference in Boston last week. IIR's Lindsay Tis, in an email, graciously explained that my request didn't allow the conference organizers enough time to "prep the speakers of the press attendance."
Was I miffed? Kind of, yeah.... although it is sort of flattering that these captains of industry would require a strategy session with Lindsay to prepare for my arrival. I honestly had no idea.
At this point, a David Rubenstein keynote feels like an Allman Brothers concert at the end of a Beacon Theatre run. Everyone there has already seen the show multiple times and memorized the set lists from previous tours. A notable difference might be that Rubenstein doesn't have an audience whose pre-show intake consists of pints at Yogi's and magic mushrooms, although it may have in 2007.
I'm not trying to disrespect Rubenstein, who was only being generous with his time. Beyond a keynote, he also sat in on a separate panel. (And I'd never think to criticize Warren Haynes for his Allman Bros. side project Govt. Mule).
The point is that if private equity is looking to reshape its image, going into hiding won't do it. Nor is limiting the press coverage of the "Super Return" conference, whose name alone -- besides being an anachronism -- has more influence on perceptions than anything I could possibly write.
I actually believe the industry has benefited from being less private. The probability of a tax hike aside, increased transparency has created more understanding, not only on Capitol Hill, but among family business owners, institutional investors, and other constituencies whose awareness feeds into the industry's ongoing development.The carried interest issue would have came up whether or not regulators understood what they were taxing. The government is trillions in the hole and the carried interest loophole isn't exactly a state secret. (Germany, for instance, dealt with the carried interest debate back in 2002.)
Misconceptions, though, are formed by roping off access to the asset class, leaving the outsiders to let their imaginations run wild. Need evidence, pick up Daniel Briody's 2002 Carlyle expose, Iron Triangle.
I would also point out that the firms that have traditionally operated in the shadows did not come out any better during the downturn than those groups who were more engaging. Cerberus Capital Management was probably the most secretive of all the bigger shops and no firm faced a bigger backlash amid the crisis.
The industry narrowly escaped registration requirements that were supposed to be part of the financial reform bill. I just don't think it behooves GPs to celebrate by shutting down their websites or switching to unlisted numbers.
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