Private Equity Briefcase

July 11, 2008

Buyout Monsters Beware!

The march is about to begin: the Service Employees International Union is gearing up for its 25-country demonstration effort next week against the private equity industry from the streets of New York to Paris to Tokyo. On Friday, it announced that activists from MoveOn.org and its affiliated Web organization, Avaaz, will protest outside of Kohlberg Kravis Roberts’ offices and portfolio companies like Toys “R” Us.

SEIU demonstrators will voice their objections to what the labor union says are special perks and tax loopholes that buyout firms “depend on to make millions.”

Aside from pressing their case on the streets below KKR offices and employees within earshot (which let’s face it, aren't likely to be a sympathetic lot), the SEIU is also aiming to hash out its concerns about private equity before pension funds and legislators. Given the fact that pension funds are major participants and long-time investors in buyout funds, the labor organization’s pleas are likely to fall on deaf ears.

The SEIU’s announcement about upcoming demonstrations planned for July 17 comes as it says “the buyout industry is doing what it always does: trying to change the subject.” It took to task an editorial in the New York Sun for getting its facts wrong, pointing out in the process that the piece was written by a person from a conservative think tank, the Hudson Institute, where it says KKR co-founder Henry Kravis’ wife occupies a board seat.

SEIU’s press release about the upcoming protests also has a link to a separate Web site with a banner titled “Take Back the Economy” and features a YouTube video labeled "Buyout Monsters on the Loose." You can get the idea already--private equity firms are portrayed as havoc-wreaking buyout monsters akin to Godzilla movie creatures. In addition, the same Web site notes that Presidential candidate John McCain has the backing of powerful buyout lobbyists, as well as political funding from Kravis.

OK, fire-breathing monsters, smart-dressed executives, bourgeoisie workers, a Presidential candidate--does anyone see an Off-Broadway play taking shape here?

Who better too, to participate in such a play than the already well-versed SEIU members and demonstrators, especially those with prior experience in street protests like those previously arranged in front of the offices of other private equity firms such as The Carlyle Group?

There are some pretty high-profile venues where the protests are scheduled to take place. In New York, the SEIU plans to gather in New York in front of KKR’s offices at 4:00 pm in Midtown Manhattan on W. 57th St., while in California the protesters will convene on the venture capital haven known as Sand Hill Road, where veteran VC firms such as Kleiner Perkins Caufield & Byers reside. Additional demonstrations are slated to be held in Olympia, Wash., and Arlington, Va.

What effect the protests will have on the business of private equity is likely minimal. For buyout groups it will be business as usual. But, if there’s a positive aspect to the planned demonstrations it’s that awareness among the general public about the private finance business could be raised. That’s not exactly a bad thing for those off-Wall Street folks that don’t understand what terms like "leveraged buyout" or "private equity" mean. Whether spectators will grasp what the business about, though, is suspect.

What is certain is that observers won’t get the entire picture. Well, as they say in the drama business, that’s a wrap.