Barbarians on Broadway
A new play depicts the worst version of private equity value-add.
Before Mitt Romney’s failed presidential campaign, the general public believed that the core business plan of private equity was to take over a company, gut it, fire everyone and, in so doing, become rich.
Four years later and one “I like being able to fire people” comment later, the general perception of private equity hasn’t changed, at least as portrayed in an upcoming off-broadway play starring John Krasinski (“The Office”) and Claire Danes (“Homeland”).
“Dry Powder,” is written by Sarah Burgess and will be directed by Thomas Kail, who just finished a stint directing the Broadway smash “Hamilton.” According to promotional materials, the play is a “viciously, deliciously funny new drama about the people shaping, and skewing, the American economy.”
The play involves a cast of private equity characters who force “massive layoffs at a national grocery chain,” “squeeze every last penny out of [another] company, no matter the human toll,” while pausing just long enough to enjoy “an extravagant engagement party.”
Given those involved, “Dry Powder” looks like it’s going to be great entertainment. It also marks yet another public relations setback for an industry that has failed to adequately explain itself to people beyond its immediate ecosystem.
The “to hell with the human toll” narrative is the most enduring and virulent of the private equity stereotypes. Various industry advocacy groups have tried to counter with the observation that the vast majority of VC, buyout and, especially, growth- equity investments are intended to spur growth and, by extension, increase employee headcount.
The best private equity firms help their portfolio companies build great teams. This doesn’t mean there aren’t any firings of employees along the way (including of C-suite executives). But generally a company that has grown revenue and profitability has also dramatically grown the employee roster.
I recently talked to experts from the private equity firms 3i Group, The Riverside Company, and the human-resources giant ADP. As that discussion demonstrates, private equity isn’t about slashing and burning—it’s about building.
You can watch a clip here:
(You can watch the full panel discussion here)
To be sure, a Broadway play about a private equity firm that adds value through human resources optimization would not sell many tickets. But with so many positive stories to tell, private equity GPs should invest more money and energy in broadcasting these, even if there’s no chance of winning a Tony.