UK - unquote" responds to critics

A random few private practitioners, labelled a ‘rogues gallery,’ was paraded at the Glastonbury music festival in the UK this weekend, as the unions continued their assault on the industry. Proving that the unions, whatever their protestations to the contrary, have an indiscriminate and rather unintelligible approach to the issue, turnaround specialist Jon Moulton of Alchemy Partners has been upgraded to a ‘rogue.’ Now, with the dust failing to settle over the controversy that is private equity in the UK, and the Treasury Select Committee members do a sterling job of revealing the limits of their collective intelligence, it is difficult to predict what turns the debate will take next. From Nick Ferguson’s now infamous ‘cleaners’ comment, to Sir Ronald Cohen’s insightful musings on the rich-poor divide, there seems no end in sight to the private equity road show. The four private equity partners who attended the Treasury Select Committee hearing, Damon Buffini of Permira, Robert Easton of Carlyle, Dominic Murphy of KKR and 3i’s Philip Yea, gave a good account of themselves. However, apart from the sterile décor and de rigueur bottled water, we might well have been watching a Stalinist show trial. For Buffini read Trotsky. Well perhaps not, but the vitriol and baseless accusations spouted by some of the committee members was not conducive to a reasoned debate. Incidentally, if this was a committee of the ‘select’ no wonder Labour is fearful of losing power. Before the main event, the MPs summoned trade unionists to air their gripes and offered them the chance to suggest what should be done to address the ‘problem’ of private equity. Other than suggesting that there should be no such thing as private companies, the unionists had few other remedies. There was much talk of ‘veils of secrecy,’ ‘transparency’ and constant reminders that what they objected to was not ‘private equity per se’ but the ‘management buy-ins.’ As any industry observer knows, MBI’s constitute a minority of all deals and are enacted as a response to poor management. I think what the gentleman in question meant to refer to was management buy-outs. Nevertheless, this was not queried and the blind continued to lead the blind. After working up a ravenous appetite, the MPs were straining at the leash when the accused finally entered. After a mild start, where it was clear Buffini et al had learnt from Peter Linthwaite’s meek showing, the MPs could restrain themselves no longer. ‘You are treating us like mugs,’ one howled, ‘oi, obviously something ain’t right, get your act together, what’s goin on,’ Sion Simon subtlety enquired. One demanded they ‘cut the nonsense.’ In all seriousness, an issue as complex and nuanced as the issue of private equity taxation and structure deserves a more balanced hearing than it was ever likely to get in front of this committee. Far more constructive would be a special committee composed of tax and legal specialists, with the ability to ask knowledgeable questions and respond in kind. For politicians to be abreast of these issues and review them is understandable and desirable. It is undesirable when these concerns are reduced to an unhelpful level of simplicity and factual inaccuracy, undermining important concerns and colouring the debate. If it did nothing else, the Committee hearings should have proved to the industry, once and for all, that the critics are winning the argument. By Nathan Williams