The Batman of business: Private equity has the guts to do the dirty work

BATMAN and Barack Obama are conspiring to put private equity under a Bat Signal-shaped spotlight this week. The unlikely duo have come together thanks to the similarity between Bane – the name of the villain in The Dark Knight Rises – and the Obama re-election campaign’s attack against Republican Mitt Romney’s career at Bain Capital.

Already there is a Twitter account for @BaneCapital, which claims to be “Gotham’s reckoning, and also a leading private equity firm, delivering industry-leading returns for our investors.” One paranoid talk show host decided that the whole thing is a deliberate plan to bring down the Republican challenger.

It’s not, of course. But it’s unfortunate for the reputation of a valuable sector. As TheCityUK announced yesterday, in its annual report on PE, London remains the world’s second-biggest private equity centre after the US, having invested £200bn in 28,000 firms over the last 20 years. This is money that has helped to provide early funding to startups, distressed firms and others, while earning returns for institutional investors, including many pension funds.

It’s a neat gag to pretend that private equity and Batman’s latest nemesis are one and the same, but it’s also a cheap one. Wit has to have truth in it, and the truth is that private equity has more in common with the Dark Knight’s hero. Not just because Bruce Wayne is a billionaire, who invests his money in companies that produce amazing new technologies, nor even because his achievements are so misunderstood that he begins the latest film in exile and disgrace. The essence they share is a willingness to make tough decisions when it matters.

It is easy to stand back and say jobs should be saved, wages should be higher and long-standing companies should be kept going. Just as in Gotham City it is always easy to say that the cancer of villainy should be cut out, but that no surgeon should wield a knife to do so.

But the people who matter are not the ones who stand on the sidelines and complain that both sides can’t win at once. It is those with the courage to get stuck in when the chips are down, whether to turn around a struggling firm or face down the forces of chaos.

There is another movie villain who actually works in PE, Larry the Liquidator in Other People’s Money. He’s supposed to be a bad guy, an asset-stripper and a corporate raider, yet his speech in his own defence is an honest rebuke to those without the moral courage to listen to his hard-headed advice: “You invested in a business, and this business is dead. Lets have the intelligence – let’s have the decency – to sign the death certificate, collect the insurance, and invest in something with a future.”

Private equity isn’t a bane on Gotham or any other city. Nor is Batman. There may be certain walks of life that will never be looked on in a kindly light by the public, but that doesn’t make their work dishonourable. As the Dark Knight demonstrates, quite the reverse.

First published: City A.M., 20/7/12

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Filed under Business, Economics, Finance, Human nature, Politics

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