This afternoon I’ll be moderating The Great Debates, here at Buyouts East in New York. Participants will include: Stephen Lerner of SEIU, Bob Stewart of the PE Council, Terrance Mullin of Arsenal Capital Partners and Prof. Vic Fleischer of the University of Illinois.
We did the first installment of this last spring, with me moderating a debate between Andrew Ross Sorkin of the NY Times and Kevin Conway of Clayton, Dubilier & Rice. This was pre-credit crunch, so we talked about increasing multiples, dividend recaps, flips and the private equity industry’s burgeoning public relations crisis.
We did the second one in San Francisco last fall (post-crunch). Issues included carried interest tax, union concerns and general economic anxiety.
So what will be discuss this afternoon? I sent some umbrella questions to each of the participants, and now I share them with you, dear reader:
Do you support the current tax treatment of carried interest? Why? Is the issue dead legislatively, or is it simply waiting for a new Congress and new President?
Most people would acknowledge that the private equity industry was behind the curve when it came to legislative lobbying/PR defense. Has it caught up? Or is the general perception of private equity worse than ever? On the flip side, does it help industry critics to interrupt and protest at industry conferences? Or does it actually hurt their cause?
Will the high purchase price multiples of 2006 and 2007 come back to bite the private equity market? Not only in terms of lower returns, but in terms of bankrupt portfolio companies? Or will the covenant-lite structure prevent bankruptcy by just levering companies past the hilt?
Should private equity firms care about the human rights records of governments from which they receive LP commitments (via sovereign wealth funds or other gov-sponsored LPs)? Will California pass legislation barring its state pension systems from investing in such firms — and would other states follow that lead? Who gets to define human rights violations?