All the efforts of private equity firms to improve their image worldwide could quickly be undone if Mitt Romney wins the "veep-stakes" to be Sen. John McCain's running mate on the Republican ticket. With the Olympics expected to take up
plenty of media attention prior to the GOP convention, McCain may announce his pick soon and the prospect of Romney,
currently on the shortlist, has the private equity industry readying itself to become a
central political issue.
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A story on Politico explores the consequences:
If John McCain selects Mitt Romney as his running mate, Romney's former
colleagues in the private equity industry expect they are in for a
bloody campaign that will paint them all as job-killing fat cats eager
to stomp the little guy to make a quick buck. Romney founded the
private equity firm Bain Capital, which he headed for 15 years, during
which time he's estimated to have made about $250 million...Last year,
congressional Democrats targeted the private equity sector for insults
and tax increases. With a Romney vice presidential nod, those charges
will go national.
With Romney on the ticket, key issues such as the tax rate on carried interest,
the place of leveraged buyouts in the credit crunch, sovereign wealth funds and the
role of leveraged buyouts in general could end up on the front burner. More
importantly, any leveraged buyout would receive scrutiny on a national
level, as would the profit margin on nearly all exits.
The selection of
Romney also could ramp up pressure on the industry's proponents
like the Private Equity Council, and it certainly would intensify the fire from critics
like the Service Employees International Union, which is already attacking McCain for accepting campaign contributions from Kravis Kohlberg Roberts & Co.'s Henry Kravis--of course, the SEIU has been leveling charges at the industry long before the election cycle.
With dealmakers
already expecting a tougher regulatory environment if a Democratic
administration comes in next year, four months of demonization is the
last thing that private equity firms want to face. -- George White
See Politico story
See video of Private Equity Council's Lowenstein on PE Taxes
Comments
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