Bain Capital co-founder Mitt Romney is now the presumed Republican nominee for President of the United States. Unfortunately for private equity, a lot of people – particularly Democrats – would like to see him fail. And they won’t hesitate to attack his background in the industry if it can be used to keep him out of the White House.
In May, President Barack Obama’s campaign launched a website drawing attention to a handful of Bain investments made under Romney’s tenure, attributing the subsequent layoffs, bankruptcies and restructurings to Bain’s strategy. In doing so, the Obama campaign hopes to cast Romney as disconnected from the average voter by fuelling the perception that he made his fortune on the backs of layoffs, says one Democratic strategist.
Private equity has already been dragged into the race; during the battle for the Republican nomination, a fundraising group supporting Romney’s ex-rival Newt Gingrich released a widely distributed documentary casting aspersions on Bain’s jobs record. The industry appeared unprepared for this scrutiny; many firms referred media requests to lobbying group Private Equity Growth Capital Council, which took two months to respond with its “Private Equity at Work” campaign.
Since its launch, this campaign has failed to gain significant traction outside the industry. Videos featured on the PEGCC’s YouTube channel, which include depictions of successful pro-growth deals as well as an animated short explaining the private equity model, had only generated around 13,000 plays overall as of press time.
By comparison, a critical video titled “How Did Mitt Romney Get so Extremely Rich?” produced by prominent liberal organisation MoveOn.org and featuring former-US Secretary of Labor Robert Reich generated over 140,000 hits within a month of being posted online.
With bad news stories always likely to get more play, both the industry and Romney face an uphill battle in their efforts to combat claims that the industry is anything more than the job-slashing, profit-churning machine that opponents assert it to be – particularly in the face of the Occupy movement and general dissatisfaction with what is broadly defined as ‘Wall Street’.
“I think [attacking private equity] can be effective, and here’s why; if you ask people about Wall Street, they’re not very happy about it. It’s not just people out protesting; it’s everybody,” Tad Devine, another Democratic strategist, tells Private Equity International. “I don’t think investment capital is viewed as [the] driver of jobs in the economy that it was, say, back in the 1990s.”
That said, attacks on private equity are nothing new – as Devine can attest. When Romney first ran for a seat in the US Senate in 1994, the strategist crafted advertisements for incumbent Ted Kennedy that highlighted Bain’s layoffs. The tactic derailed Romney’s attempt to unseat Kennedy, which had been gaining traction until then.
But while it worked in 1994, Devine cautions that focusing attacks solely on Romney’s private equity record could allow the candidate – by now an experienced campaigner – to flip the attack on its head and showcase his successes as a job creator. If Romney is successful in adopting this approach to counter Obama’s most recent attack, the private equity industry will appreciate the opportunity to take a break from playing the villain.