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For example, Tuesday The New York Times reports on Toys 'R' Us Inc.'s latest effort to outmaneuver Wal-Mart Stores Inc. (NYSE:WMT) and Target Corp. (NYSE:TGT) this holiday season by opening FAO Schwarz stores inside 585 Toys 'R' Us locations. The media loves a black and white tale of a scrappy underdog taking on a bigger challenger, and the Toys 'R' Us story has all the trappings of a David and Goliath tale except for those pesky PE firms. Consequently, the report only briefly glosses over the fact that Bain Capital LLC, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust acquired the company for $6.6 billion in 2005, and it does not give them their due. Meanwhile, The Wall Street Journal also played into the theme of private equity is evil when it reported Toys 'R' Us is possibly facing an antitrust violation for alleged anticompetitive practices. Toys 'R' Us reportedly leaned on Britax Childcare Ltd., a maker of car seats, high chairs and strollers, to force Target to stop discounting Britax products. The Oct. 7 story slips in details that Britax is a portfolio company of Carlyle Group. In fact, the Journal story more specifically misidentifies Britax not as a portfolio company, but as a unit of Carlyle. It comes across as a sly wink and nod to the populist vision that PE firms are evil and will collude with each other whenever possible. A September story from The Wall Street Journal about how Toys 'R' Us is capitalizing on the disappearance of KB Toys from malls by opening seasonal mall stores branded as Toys 'R' Us Holiday Express also fails to give the PE firms credit for their turnaround of the chain. In fact, unlike the Times piece or the October antitrust article, the September Journal story doesn't even bother mentioning Bain, KKR or Vornado's ownership of the chain. Before the buyout firm's involvement, Toys 'R' Us was struggling to keep pace with the larger big-box retailers who were poaching customers during the all-important Christmas shopping season. The stock market was punishing its shares as growth waned. The buyout firms saved it from befalling a fate that likely would have resembled Circuit City Stores Inc., which filed Chapter 11 last year after it failed to keep pace with big-box retailers. Presumably, the buyout firms are a big impetus behind Toys 'R' Us' new efforts to branch out and role up the industry. Since the buyout firms took over the retailer, it has acquired bankrupt FAO Schwartz, KB Toys and eToys.com. With these additional brands, Toys 'R' Us is beating back the competition from Sears Holdings Corp. (NASDAQ:SHLD), Target and Wal-Mart. Sadly, in the black and white world of the mainstream media, there is no room for shades of gray where PE firms may not be the villains after all. - Matthew Wurtzel
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From: Mitchele X. Vigil,
This is considered substantive reportage on Leveraged Buyouts? Seriously? Nothing more than an apologist puff-piece. Where are the hard hitting facts? Increased number of employees? Increased tax revenues to those municipalities where these stores operate from? Have the employees seen a pay raise, or is it simply the GP who made money? What are the current ratios? What may those indicate of the future viability for the firm. No mention whatever of the Special Dividends paid, and the increased debt ratio the company now carries. There are more substantive pieces on TMZ.
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October 28, 2009 12:13 AM
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Private equity firms get the short shrift from the mainstream media. When a deal blows up in their faces, major news outlets are often quick to point fingers at buyout shops and portray them as greedy villains. Case in point, the bad press PE received when Simmons Bedding Co. said they will 
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It is true that many companies wouldn't exist if VC and PE firms didn't contribute capital and expertise, the problem is that the most people lump the bankers that make their living over charging college kids for loans or looking for ways to increase over draft fees.