Maybe private equity isn’t so bad after all.
A recent poll conducted by the Monmouth University Polling Institute found that 42 percent of American voters familiar with private equity and venture capital investing believe that firms are good for the nation’s economy. Only 22 percent held a negative opinion of the industries, and the remaining 36 percent said they did not know nor had an opinion.
The poll, which was administered between 4 June and 6 June, measures the public’s perception of the asset classes following a series of attacks made by Republican primary challengers and President Barack Obama on Mitt Romney’s track record at Bain Capital, said Polling Institute director Patrick Murray.
“What we’re really trying to figure out is [the perception following] the attacks during the Republican primary process, as well as the attacks that have been coming out from the Obama campaign. And what we’re finding is that [the attacks don’t] seem to be … making the people think negatively about the industry as a whole,” he said.
The study has been criticised by some in the media for failing to distinguish between venture capital and private equity. Whereas venture capital firms tend to focus on start-ups, and are often associated with the technology sector, private equity firms generally invest in more established companies.
However, those distinctions are lost on the average American voter.
“We found that [the public] didn’t really understand a difference between the firms,” Murray said, adding the real question the poll answers is: “how are they responding to the terms with what little knowledge they do have?”
Only 20 percent of likely voters said they knew “a great deal” about venture capital and private equity, and those that are familiar may have developed that understanding over the last several weeks, when mainstream media coverage of the industry has increased, Murray said.
That coverage has been criticised by industry sources, who said even reputable news organisations sometimes fail to grasp a true understanding of how the private equity model works.
Respondents that did say they were highly familiar with the industry tended to have a positive impression across party affiliations, Murray said. A 38 percent plurality of likely voters said the industries create jobs, whereas only 23 percent said they eliminate jobs. A combined 40 percent said that venture capital and private equity firms have either no impact on the jobs market or did not know.
Both Romney and Obama have highlighted Bain’s record on job creation over the course of the campaign. While Romney has often asserted that Bain is responsible for roughly 100,000 US jobs, Obama has levied specific criticisms of certain investments that resulted in layoffs.