Thursday, July 7, 2011

Four Horsemen of PEU-Pocalypse

Four prominent private equity underwriters (PEU's) spoke at the Milken Institute Global Conference, which offered a Currency of Ideas.  The "Global Opportunities in Private Equity" panel included:

David Rubenstein of the Carlyle Group, Jonathan Nelson of Providence Equity Partners, David Bonderman of TPG Capital and Leon Black of Apollo Global Management
Dealbook reported:

The panelists conceded to the host, CNBC’s Maria Bartiromo, that the United States government had ultimately concluded that private equity was no longer considered a bogeyman. Still, they were piqued by a slight implication in the Dodd-Frank legislation that private equity still bore some systemic risk.
Piqued at the slight implication?  I guess Rubenstein forgot about Carlyle's $681 million in capital calls to CalPERS in fall 2008.  At least they admitted financial regulatory reform gave private equity a virtual free pass.  Carlyle's Boston Private took $153 million in TARP money to survive.

The world's quality guru, Dr. W. Edwards Deming, spoke in 1984 about an economy without takeovers, without leveraged buyouts (LBO firms).  LBO morphed into private equity before exploding the last decade.  Greed is their constancy of purpose, evidenced by 30% annual return targets.

Carlyle and company are beyond boogeymen.  They're the Four Horsemen of the PEU-Pocalypse, ready to plunder America.

Update 4-26-15:  Dr. Deming said his message came down to one thing, the human spirit.  PEUs and their horrific management practices can be seen in a powerful story of how management crushes that very thing.  

Update 7-28-15:  Bad management theory resulted in excessive executive compensation at the expense of everything else.  I can hear Dr. Deming bellow, "Will they ever learn?"