Tuesday, June 18, 2024 Jun 18, 2024
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Rick Perry’s Faux Outrage Over Private Equity


Gov. Rick Perry’s on a slippery slope ripping Mitt Romney as a “vulture capitalist” at Bain. He’s doing it, of course, because it’s about the last arrow in the guv’s quiver. But Perry has corraled a lot of dough from private-equity-type firms himself. Blasting the way p/e firms work is short-sighted and stupid, and plays right into the Occupy Wall Street (read: White House) narrative.

There are always pluses and minuses with private equity but overall it’s a positive, and Perry of all people has to know it. For an example consider what’s happened at ClubCorp, the Dallas company that was taken over by KSL Capital, a Denver-based private-equity firm, in early 2007.

When KSL snapped up ClubCorp, which owns golf and country clubs and business and sports clubs, the Colorado company considered ClubCorp to be underperforming, or “successfully stagnant,” as it put it.

And, underperforming companies don’t last forever.

So KSL did what p/e firms do: it administered some tough love. It shrunk the corporate-headquarters staff by about 30 percent, deep-sixed an employee stock-ownership plan, and eliminated a college-recruitment program, among other things.

In the five years since — which included the steep economic downturn — ClubCorp has acquired eight properties (and sold off two), souped up an incentive plan for managers, and pumped more than $200 million back into the company for improvements.

According to ClubCorp CEO Eric Affeldt, profitability over the five years since the acquisition has been “among the best” in ClubCorp’s 55-year history.

In other words there’s been pain for some, along with growth.

Whether you’re talking about KSL and ClubCorp or Bain and the GSI Steel Co., Gov. Perry knows exactly how this stuff works. Which makes his act as an Oliver (Wall Street) Stone wannabe especially unconvincing.