Recent Buyout Industry Claims

A case in point is the jobs study released this month by the buyout industry’s Washington DC lobbying group, the Private Equity Council. Coming as the industry is being forced to defend its obscene profits and exploitation of tax loopholes, the new claims and timing appear to be an attempt to soften the impact of the Lerner/Davis World Economic Forum report.

The industry-sponsored study is deeply flawed. The study, which relies on self-reported data provided by big buyout firms, is based on a selective sample comprising only 42 anonymous companies acquired by eight hand-selected buyout firms between 2002 and 2005.

•  According to The Wall Street Journal, “the sample size is relatively small compared to the total number of buyout transactions typically conducted in a year-– a whopping 11,800 deals from 2000 to 2006 alone, according to the report.”
• The Financial Times noted, the “study only considers data from 60 per cent of large portfolio companies between 2002 and 2005, potentially exposing it to criticism that the private equity firms were selective in offering the information.
• Reuters commented, “without more information on how big a slice of the corporate universe controlled by private equity the surveyed companies represent, and why these particular companies were chosen for the survey and not others, the report seems to raise as many questions about job creation as it answers.”

In response to the industry-sponsored study, SEIU Private Equity Project Director Stephen Lerner said, “This study is part of a multi-million dollar lobbying plan by an industry on the defensive. There is little reason to trust and no way to verify self-reported claims by the super-secretive buyout industry.”