Presidential candidate Mitt Romney’s famed background as a successful businessman has given a multitude of journalists, particularly business journalists, a topic of renewed interest to cover this election season that is usually left to the few — the private equity beat.
Romney’s past as a consultant and then co-founder of Bain Capital LLC, one of the largest private equity firms with assets of $65 billion, has brought private equity from out of the shadows and into the harsh limelight.
This isn’t to say that stories about private equity firms didn’t exist before, they did. In fact, the major business news outlets, such as Bloomberg and The Wall Street Journal, have reporters dedicated to solely covering private equity.
Some private equity companies are even publicly traded, such as The Blackstone Group LP and KKR & Co. LP. And the firms are always mentioned if they are involved in high profile deals taking a public company private, such as the announcement today that Ancestry.com would be bought by European private equity firm for $1.6 billion.
What is often a niche beat, however, has become something of mainstream interest thanks to election coverage. Political ads accuse Romney of laying off thousands of American workers while with Bain Capital.
With this public interest focused in on private equity, stories about elusive private equity firms have proliferated leading up to election day on Nov. 6.
Particularly, stories that relate to Bain Capital have skyrocketed.
This increased attention on private equity has made me question whether this attention on the firms, particularly Bain, is deserved or whether the business media is capitalizing on political talking points to draw in readers.
Subpoenaing more than a dozen firms
I first began noticing the trend toward stories with a private equity theme early in September when New York attorney general Eric Schneiderman subpoenaed more than a dozen private equity firms to see whether they were abusing a tax strategy in order to cut hundreds of millions of dollars from their taxes.
The media’s coverage of this story is defensible, as multiple firms were subpoenaed and the investigation has implications for New York state, the private equity firms and for the election.
Yet, I can’t help but wonder if this story would have received far less coverage if Bain Capital had not been one of the company’s subpoenaed and if the journalists had not been able to tie the story back to the election.
“Mr. Schneiderman’s investigation will intensify scrutiny of an industry already bruised by the campaign season, as President Obama and the Democrats have sought to depict Mr. Romney through his long career in private equity as a businessman who dismantled companies and laid off workers while amassing a personal fortune estimated at $250 million.”
The connection between the election and this investigation that all major media outlets sought to make is obvious.
A Bunch of Malarkey
More recently, the private equity firms have come under allegations that the biggest buyout firms colluded in bidding on takeovers, and the media has been covering the story voraciously.
“The lawsuit is a complete fabrication and a bunch of malarkey,” Tony James, president of Blackstone, said in response to a question from Bloomberg News on a conference call.
“It’s a long, long way from what’s being alleged by these latest attorneys, and I suspect there’s some political motivation lurking in here because we have a private-equity guy running for president.”
This statement particularly struck me. Though when I see many private equity stories right now, I catch myself saying, “Would this story exist if it weren’t election season,” James’ statement also reminded me that I also need to ask myself if the subject matter would exist for journalists to report on if it weren’t for the election.
Thrust Into the Spotlight
Reuters reported yesterday a story about American Petroleum Tankers LLC, which is controlled by private equity firm Blackstone. The story was about the company’s desire to order two new tankers if approved for a $340 million loan that was originally rejected by the Maritime Administration.
In July, APT sued alleging that the government’s stance was based “primarily on the fact that APT is owned by investment funds managed by private equity firms.”
Directly in the story, the reporter writes, “But the lawsuit comes at a time in which the industry has been thrust into the political spotlight as Republican presidential hopeful Mitt Romney defends his record as chief of Bain Capital LLC from attacks by President Barack Obama’s campaign.”
No matter the private equity story, ties to the election seem ubiquitous.
Romney has additionally come under fire for Bain’s decision to outsource the jobs at Sensata Technologies Inc.
And then there is this story that ties Romney, Bain and the voting machines in Ohio and Colorado.
The election is proving that private equity is everywhere, but will the stories be here to stay come Nov. 7?
