In May, Bain and other firms exited the deal, selling Warner Music to billionaire Len Blavatnik for about $3.3 billion, nearly $1 billion more than what they had paid.
“In businesses that need to contract, the private equity firms help those businesses contract, but I think in many cases they would’ve contracted anyway,” Kaplan said.
Romney’s candidacy has put a spotlight on the industry, which last withstood heavy scrutiny around 2006 and 2007 when firms began buying out enormous companies with household names, including Hertz, Hilton Hotels and Dunkin’ Donuts.
The Private Equity Growth Capital Council, a trade group for the industry, counts 2,300 firms in 2011 in this country investing in 14,200 U.S. companies. The group says companies backed by U.S. private equity firms employ 8.1 million people.
Josh Kosman, author of the book “The Buyout of America,” said that despite the businesses’ positive track record with investors, it’s hard to find examples of companies that private equity firms have expanded to Fortune 500 size.
Moody’s released a report this month looking at 40 big deals from the buyout boom, which they count as lasting from 2006 to early 2008. A few had performed well, the report said, but overall Moody’s found that the companies have had “weak revenue growth and high default rates” since the deals had been closed.
When Romney was asked this week on “Fox News Sunday” to explain his views on “creative destruction,” he defended it as an “essential part of free enterprise.”
“You have to have a setting that allows people to get trained for the new positions,” he said, “a safety net to make sure people are not on the streets.”