Private equity last night became an issue in presidential politics.
Mitt Romney’s private equity background was raised during last night’s GOP debate in New Hampshire, in which candidates were allowed to ask each other questions. Here is the relevant excerpt:
(1) It’s kind of fascinating that it’s Jon Huntsman who played the PE card, given that his father recently co-founded a private equity firm with one of Romney’s former partners at Bain (something Romney might have mentioned were Huntsman a viable candidate). I hadn’t really expected any GOP candidate to discuss private equity — Republicans are loath to insult capitalistic private sector experience — but figured were anyone to do it, it would have been Rick Perry. Then again, you need to be awake to play cards…
(2) When the debate over carried interest taxation began several years ago, private equity execs tried to link themselves to venture capitalists (a group generally more popular in both Washington and America at-large). Looks like Romney will try a similar tact, when he reaches the general and this issue becomes more central. As I’ve written before, it’s true that Bain Capital was basically a VC firm when it launched. But by the time Romney left, its primary focus was leveraged buyouts.
(3) Romney is going to keep trotting out that “tens of thousands” figure, even though there is no real evidence to back it up. Bain Capital doesn’t keep historical records of employment levels at its portfolio companies — either ones it helped create out of whole cloth or ones it acquired. This isn’t to say Romney’s number isn’t defensible. For example, Staples alone has around 90,000 employees — and the company arguably wouldn’t have existed without Romney and Bain. On the other hand, Bain hasn’t been actively involved with Staples for well over a decade (it’s kind of like when the National Venture Capital Association takes jobs-creation credit for all of Apple’s current employees or market cap). And Romney doesn’t specify whether his number is net or gross. Not saying he’s right or wrong. Just saying there are a variety of ways to slice the numbers.
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