PEC Statement: SEIU’s “Behind the Buyouts”

Statement By Douglas Lowenstein, President Private Equity Council on SEIU’s “Behind the Buyouts” Study

Washington, DC – April 24, 2007 –

The following statement should be attributed to Douglas Lowenstein, president of the Private Equity Council:

Private equity firms are driven by one overarching objective: to enhance the value and grow the businesses they acquire. There is no one formula for doing so, and every transaction is unique. While we welcome an informed debate about the role of private equity in the global economy, we don’t think that isolating five transactions out of the more than 3,000 PE acquisitions between 2004-06 accurately reflects the private equity market.

“In fact, research shows that private equity investment often results in long-term employment growth and enhances the economic viability of a business to the benefit of all stakeholders. A.T. Kearney found earlier this year that PE firms generate employment, on average, at a much faster pace than comparable, traditionally financed firms. Earlier this month, The Financial Times reported that its study of the 30 largest European private equity transactions in 2003-04 revealed that ‘overall, jobs were more likely to have been gained than lost as a result of private equity-backed buys.’

“Curiously, in discussing private equity’s impact on the country, SEIU ignored the salient fact that the largest investors in private equity are public employee pension funds, foundations, and universities who have flocked to the sector because top PE firms have generated returns more than triple the S&P 500. Thus, the benefits of PE activity flow through to tens of millions of firemen, police officers, and other public servants via more secure retirements, and also help fund college scholarships and educational opportunities, and disease research. In fact, the PE investors have received $181 billion from private equity funds since 2000 which, in turn, means less pressure on states to raise taxes or cut spending to meet their pension obligations, and more money to spend on critical services such as health care.

We recognize the SEIU’s interest in promoting good jobs, and we look forward to engaging in a constructive, open, and fair-minded dialogue with the union and all other stakeholders.”

Robert W. Stewart
202 652-2313