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Doug Lowenstein, president of the Private Equity Council, gave the keynote luncheon address Friday at Columbia Business School's 14th Annual Private Equity and Venture Capital Conference, providing the audience an overview of the perception and public policy problems that the buyout industry faces in 2008.
Reviewing the PR missteps that the industry made over the past few year, Lowenstein said that the "private equity industry failed to heed the advice of the Grateful Dead's Jerry Garcia: 'There's trouble ahead, trouble behind, Casey Jones you'd better watch your step.' "Private equity was asleep at the throttle," Lowenstein continued. "By 2005 the industry was becoming a victim of its own success. "The industry's response to criticism was too slow. Private equity allowed critics to define the industry before it defined itself, and that in politics and public policy is a toxic mistake." Lowenstein said that the buyout industry had to do a better job of explaining itself and its benefit, although that won't make criticism, legislation and other issues go away. "We need to tell the stories of the companies that private equity firms buy and improve," said Lowenstein. "If the top 30 private equity firms remain the only face of the industry, the perception will be that the purpose of private equity is to make a lot of money for a small number of financiers in New York and other financial centers." "If the criticism is 'buy it, strip it and flip it,' our reply must be 'own it, invest in it and grow it.' " While conceding that job growth is an important metric, he thinks that it cannot be the sole metric by which private equity is judged. "We need to broaden the discussion of private equity impact beyond just job creation," Lowenstein argued. "You can't rip the heart and soul out of a company and then turn around and expect to sell it to another buyer later on." "Last year was not a blip on the radar screen; there is and will be interest in what we do," he said. "The private part of private equity's days are over." - George White Columbia PE & VC Conference: LPs in tightening credit markeColumbia PE & VC Conference: Africa could be home to more investment See Columbia Business School PE & VC Conference schedule CategoriesPrivate capital video
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