Daily Ticker’s Aaron Task writes: If you think private
equity is a secretive industry that operates in the shadows, just look around:
Companies from Dunkin' Donuts (DNKN), J. Crew, Dominoes (DPZ), Del Monte, Toys
R Us, Miramax, Michael's Stores, Burger King (BKW) and countless other
'household' names are either currently or were previously operated by private
equity firms.
The ubiquity of private industry in our everyday lives is a
relatively new phenomenon, one that's largely occurred in the course of the
past decade. During the credit bubble, the private equity model of debt
financing grew to astronomical heights. By some estimates, the assets of
private equity firms — the value of the companies they own plus cash ready to
be deployed — is around $3 trillion.
Thanks to Mitt Romney's run for the White House, private
equity has come under intense scrutiny. Kelly says the industry's track record
is much more complicated than is commonly portrayed.
"Romney made it very much about jobs," but most
private equity firms "never set out to be about jobs," Kelly says.
"Private equity guys say 'we do sometimes [create jobs], sometimes we
don't. It's not really what we set out to do.'"
Sometimes that "something" means layoffs or even
shutting companies down; but it can also mean expansion and more jobs created.
Kelly says it's "maddening" but there's no definitive data on the
industry's track record when it comes to jobs. Many private equity firms don't
even keep track of the jobs created or lost by their investments, he notes. It just doesn’t matter to them.
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