There is a pleasing irony in the world’s most powerful buyout heads giving up on their anonymity and wandering into the spotlight at precisely the point when market dynamics have turned their firms’ huge firepower into blanks rather than blank checks.
Earlier this week, Permira unveiled an 84-page account of its structure and activities in 2007, as well as a forward-looking missive from chairman Damon Buffini. The Permira document followed an even more extensive report from Terra Firma, totalling 120 pages and featuring the thoughts of music industry bete noir Guy Hands.
After taking a substantial kicking from the far more PR-savvy unions last year, private equity now appears to have gotten the gist of this communications lark. “Some might be surprised that we have chosen to release such comprehensive information to the world at large,” says Hands in his ‘Letter from the CEO.’ “The simple truth is we have nothing to hide. Private equity should not be clouded in secrecy, but explained.”
After admitting that “private equity firms have been poor at communicating this,” Terra Firma later points out that it has spent approximately €325,000 and 2,000 hours in providing such transparency. That is, admittedly, a drop in the ocean for a firm that raised €5.4bn last year, but a worthwhile investment given that the job of restructuring companies “is often not painless (and, in the short run, can produce unattractive headlines).”
Like Terra Firma, Permira talks up its desire to go above and beyond the disclosure requirements suggested by Walker. Both are also at pain to show that the investors who have benefited from the private equity gravy train include pension funds, especially the members of those schemes. Permira says that beneficiaries include “more than 30 million pensioners (current and future), over 40 charities and foundations and 20 life insurers.”
So, will this newfound desire for transparency be rewarded with acceptance and praise from private equity’s critics, ie. government and unions? To date, there has been no response from politicians– though, considering Treasury Select Committee chairman John McFall branded the Walker’s guidelines as a failure and still has trouble distinguishing private equity from publicly-listed companies, this is unsurprising.
More unexpected was the lack of awareness from unions so merciless in their attacks on private equity last year but have been as quiet as the debt markets in the past several months. When called, the GMB union, infamous for its hounding of Buffini with its ‘He sacks disabled workers doesn’t he?’ campaign, had to be pointed to Permira’s report.
Still, given the near total lack of big buyout activity currently, the likes of Buffini and Hands will have far more time this year to spend talking about what they do. Whether that makes for interesting reading next year is anyone’s guess.
This post first appeared at Thomson Merger News, a sister site to peHUB that focuses on the European M&A market.