Mortal public-image combat

It turns out that the private equity industry has much in common with the video game industry.
Both industries have exploded in size over the past two decades having started out as cottage industries.
Both have become significant contributors to the US and global economies, creating jobs and backing innovations.
Both have generated a class of extremely wealthy entrepreneurs.
And crucially, many politicians and members of the public feel video games and private equity both need tighter restrictions.
In the case of video games, parents have long been concerned that the frequently violent images and themes portrayed in these games will be harmful to children.
In the case of private equity, many public shareholders, union members and politicians are worried that GPs exist only to suck the life out of US corporations for personal gain.
Unlike private equity, the video game industry got its lobbying act together some time ago. In 1994, the industry’s first representative body was founded in the form of the Entertainment Software Association (ESA), which lobbies for favorable legislation before US lawmakers, as well as attempts to portray the video game industry in the best light to the voting public.
The ESA was the brainchild of Doug Lowenstein who, in December, was announced as the inaugural president and chief executive officer of the newly formed Private Equity Council (PEC), the buyout industry’s first lobbying effort in the US.
The PEC was formed initially at the urging of Carlyle co-founder David Rubenstein, who has for years been critical of private equity’s wall of silence before the public and policymakers. Rubenstein has led a growing chorus of industry insiders who feel that unless private equity proactively seeks to influence policy and public perception, forces in opposition to the industry’s thriving will be able to set the agenda.
Big private equity’s lack of a lobbying body stood in contrast to the venture capital industry, which for 33 years has been represented by the National Venture Capital Association (see an interview with the NVCA president Mark Heesen on p. 34). While venture capital is admired on Capitol Hill and by the public as a creator of jobs and new technologies, large private equity firms are often perceived as job destroyers and hostile market interlopers.
Last year, a handful of large private equity firms including Carlyle, Apollo Management, Bain Capital, The Blackstone Group, Hellman & Friedman, Kohlberg Kravis Roberts, Madison Dearborn Partners, Providence Equity Partners, Silver Lake Partners, Texas Pacific Group; and Thomas H. Lee Partners hired veteran Washington, DC lobbyist Harry Clark to establish a trade group and scout for an appropriate executive leader.
According to a press release, the mission of the PEC will be to “conduct research and provide information about the industry to policy makers and others interested in understanding what private equity is, how it operates and the increasingly important role this alternative asset class plays in the US and global economy. . . The counsel will launch research, public affairs and government outreach initiatives to explain the multiple contributions private equity makes—to investors, to companies and their employees, to the economic well being of communities and to public employee pension funds.”
As the head of the ESA, Lowenstein worked tirelessly to justify the unfettered growth of the video game industry.
So long as GPs refrain from ripping the beating hearts out of each others’ chests (as do the fighters in video game “Mortal Kombat”), Lowenstein may find the private equity industry somewhat easier to champion.