The more hysterical the debate becomes, the more vicious the attacks, and the more unfair the mooted sanctions against the industry. This means more work for everyone involved in communications.
Private equity personifies the arrogance of new money, and the belief of many of the City’s Thatcher children that they are accountable to no one but themselves. For years they scorned talking to the press or explaining their actions in public, because they said they did not have to.
For a while, of course, this was true. When they were small, nobody much cared. But as their industry grew, so did their rewards and their arrogance. They refused to listen to warnings
that they were abusing their licence to operate.
The explosion of press and Parliamentary rage is a timely reminder to them – and to their peers in hedge funds and investment banks who show many of the same tendencies –that there is such a thing as public opinion, and that the public will only allow them to take the mickey for so long. Even more to the point, public opinion ultimately sets the rules. Too late they and their peers may begin to understand that real PR is not about spin and candyfloss publicity; it is about ensuring that the public understands what you do, and finds it acceptable.
Even now, as leaders of the industry are struggling to put the toothpaste back in the tube, it is fascinating to see how many others in the private equity business still fail to understand that there has been a shift in the way the industry is perceived.
Thus when Nick Ferguson, an elder statesman of the industry, agreed that there was an inherent unfairness in the millionaires in private equity having a lower tax rate than an office cleaner, the response by the industry’s inept spokesmen was to tell the Treasury Select Committee that they got no special privileges. When Sir Ronald Cohen, another industry veteran, called for a reasoned debate on reform, the response from the industry was to label him as a friend of Gordon Brown – by implication, the enemy within. The private equity industry may find that it pays a high price for these mistakes.