PEO 2.0:<br/>POWER TO THE PEOPLE

Many a good thriller has reached its climax with a final confrontation between the good guys and the bad guys. And so it was this month in the UK, as the GMB trade union and buyout firm Permira – the chief target of their recent attacks – came face-to-face for the first time (although in this case, nobody seems quite sure who the good guys are).

PrivateEquityOnline's report on their long-awaited first meeting was the most popular story of the month, as our readers flocked to see what happened when the two principal protagonists of the recent controversy finally found themselves alone in the same room.

But to many people's surprise, the outcome was not further fireworks but an outbreak of peace. Permira and the GMB issued a joint statement after the meeting to say they had held “constructive discussions” and would “seek to build a constructive dialogue.” That's twice as constructive as any of the comments made in the press prior to the meeting.

But to many people's surprise, the outcome was not further fireworks but an outbreak of peace. Permira and the GMB issued a joint statement after the meeting to say they had held “constructive discussions” and would “seek to build a constructive dialogue.” That's twice as constructive as any of the comments made in the press prior to the meeting.

To explain this miraculous turnaround, it seems we need look no further than Permira chief executive Damon Buffini, who has suffered more than most at the hands of the GMB. It has been suggested that Buffini would make a perfect – albeit reluctant – poster boy for private equity, on the rather cynical basis that he isn't white and was brought up on a council estate.

But the events of that day suggest that his personal charm is a much more effective weapon than his family background. After a few hours in a room with the great man, the union's hitherto implacable hostility seemed to melt into awed-struck admiration. “He is not only an astute businessman, but from first impressions is also a man of his word,” gushed union spokesman Paul Maloney.

Which just goes to show that, despite the industry's fascination with deals and returns, the most potent weapons in a buyout firm's armoury are usually its people.

This might also explain our continuing fascination with the personalities behind private equity's biggest brand names. This month, people stories again accounted for more than half of the ten most popular articles.

These included the forthright views of Carlyle's David Rubenstein on the future of private equity, in an exclusive interview with PEO. His most potent argument was that transparency in itself would never appease the industry's opponents, as long as jobs were under threat and costs had to be cut. This was particularly salient given the recent launch in the UK of the Walker Group, a working party that is drawing up a compulsory code of transparency for buyout firms. Rubenstein also suggested that the industry has some branding issues – it's time for “private equity” to become “change equity”, he believes.

Rubenstein may have been equally unimpressed by the recent admission from fellow Wall Street behemoth Lloyd Blankfein, the chief executive of Goldman Sachs. Blankfein said that Goldman would raise about $20 billion for its latest buyout fund, which would see it overtake the likes of Carlyle and rival the huge funds being accumulated by KKR and Blackstone. Then again, KKR may need to be expanding its horizons too, given that it seems to be spending money faster than it can raise it at the moment – the firm revealed this month that it had already committed 90 percent of the $5 billion vehicle it listed just ten months ago.

Elsewhere, three astute piece of recruitment caught the attention of our readers. PEO revealed that Mezzanine Management's Christiian Marriott was moving to Barclays Private Equity at the end of his current firm's fundraising process, while Leonard Fischer, one of the most famous bankers in Germany, threw in his lot with private equity by agreeing to join Tim Collins' RHJ International as co-chief executive. Swiss fund-of-funds manager LGT Capital Partners was also on the hiring trail with four appointments, including new heads for its Asian and US offices.

As we've said before, people like reading about people…