Buyout firms struggle to repair image under Romney spotlight

Thu Mar 1, 2012 10:09am EST
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By Simon Meads and Greg Roumeliotis

Berlin (Reuters) - They may have had Bob Geldof as headline speaker, but as private equity executives headed home after their annual industry gathering in Berlin, many acknowledged they still had much to do to repair their image as unscrupulous corporate raiders.

Thrust afresh into the spotlight by the attempt of former buyout supremo Mitt Romney to become the next President of the United States, private equity bosses have been fighting a rear guard action against claims of self-interested asset stripping and job cutting, as well as their preferential tax treatment.

"Romney's biggest Achilles heel has turned out to be the time he spent running Bain Capital," said Lord Mark Malloch Brown, chairman Europe, Middle East and Africa of business advisory firm FTI Consulting.

"If he can't turn around the image, with millions of campaign dollars and his political life or death riding on it, one shouldn't underestimate the task," Malloch Brown, a former deputy secretary general of the United Nations, said.

Private equity firms that bought some of the world's largest companies at the height of the buyouts boom from 2005 until 2008 with plentiful and cheap debt financing escaped blame for the financial crisis when attention fell on banks and hedge funds.

Bain Capital, which Romney co-founded, has grown into one of the world's largest private equity groups, investing in Europe's largest buyout last year alongside fellow private equity group Hellman & Friedman for Swedish alarms group Securitas Direct.

As they sat in Germany, where private equity firms were once characterized as locusts by the former head of the German socialist party, there was palpable concern among executives about the negative publicity they are now receiving in the United States, the spiritual home of the leveraged buyout.

"It has all coalesced around Romney," said Marc Leder, co-CEO of Sun Capital Partners, a firm that attempts to save companies on the brink of bankruptcy and turn them around. "The private equity industry is being raked through the coals."   Continued...

Republican presidential candidate and former Massachusetts Governor Mitt Romney speaks during a campaign event in Mesa, Arizona February 13, 2012. REUTERS/Joshua Lott