Less widely understood is how Youngkin built that wealth. In a campaign ad, Youngkin describes joining Carlyle in 1995 when it was a “small start-up,” and notes that by the time he became co-CEO, it was a global business powerhouse.
While the business had only a few dozen employees the year he joined, that description obscures the unique nature of Carlyle as one of the world’s most influential private-equity firms, occupying the heart of the power structure in Washington. Far from the cliche of a few entrepreneurs working in a garage, Carlyle by 1995 had existed for eight years, boasted a former defense secretary as chairman and had advised a member of the Saudi royal family on a $500 million investment in Citigroup.
Youngkin’s successful career at the company is both a political strength — the central credential for a candidate with no record in public office — and a potential liability.
The nature of private equity itself, which involves buying and selling companies, has sometimes dogged politicians. Republican Mitt Romney endured tough scrutiny over his record in private equity at the Boston firm Bain Capital when he ran for president in 2008 and 2012, with questions raised about jobs cut or sent overseas by the firm’s investments.
Then there’s the character of Carlyle.
“Republican voters have a soft spot for successful businessmen,” said Quentin Kidd, a political scientist at Christopher Newport University. But ever since Donald Trump won the presidency, he added, the Republican base has also been enthralled with anti-establishment outsiders.
“What was appealing about Trump to Republican voters was that he had all the success they found attractive in a businessman, but it wasn’t establishment success. In fact, he thumbed his nose at the establishment. And Youngkin is sort of the opposite of that,” Kidd said.
Youngkin generally won praise as a capable, collaborative manager from a handful of former Carlyle executives interviewed for this article — all of whom spoke on the condition of anonymity to discuss the closely controlled company.
But several expressed disappointment that someone whom they viewed as a serious-minded business leader has coddled the Trump base of the Republican Party, such as by being hesitant to acknowledge that President Biden was legitimately elected.
“I wouldn’t have done that,” said one former Carlyle executive, adding that Youngkin’s approach to the campaign — slow to roll out policy proposals, quick to support the polarizing former president — was frustrating. “I’m not even sure what Glenn’s agenda is. . . . But [politics] is a dirty business, and you’re dealing with a lot of irrational voters.”
One former Carlyle executive praised Youngkin’s business career but demurred when asked whether the same admiration extended to his political activities.
“I don’t have any insight into any of that,” this person said, declining to discuss the topic.
“You don’t see a lot of Carlyle people coming out and supporting him,” another former Carlyle executive noted.
Youngkin’s campaign declined to make him available for an interview for this article. A spokeswoman for Carlyle declined to comment.
The rich and the powerful
Youngkin, 54, who played basketball at Rice University in Houston, earned undergraduate degrees in mechanical engineering and management studies before heading into the business world. With an MBA from Harvard, he worked at McKinsey & Co. before joining Carlyle in 1995 as an analyst.
The firm had sprouted in 1987 from the legal, political and business circles of Washington. Within a few years, three people formed its brain trust: former Carter administration official David Rubenstein, former Marriott executive Daniel D’Aniello and former MCI Communications executive William E. Conway Jr.
At that time, Washington was a big zero on the national financial scene. But Rubenstein had an insight that wound up defining Carlyle: Rich people and powerful people like to rub elbows with one another. If he could arrange that, there were deals to be made.
So they hired former defense secretary Frank Carlucci as chairman, beginning a long line of A-list politicians cycling through Carlyle as advisers or executives. Former president George H.W. Bush, former British prime minister John Major, former secretary of state James Baker III — all these heavy hitters played roles in those early years, making connections, making fortunes.
Initially, the firm’s focus tended toward buying aerospace and defense companies, managing them for a while and then selling them off.
Carlyle became so synonymous with the ruling elite — and particularly with connections in the Middle East — that it was regularly the focus of conspiracy theories. Its reputation was not helped by the fact that as the twin towers fell on Sept. 11, 2001, a half brother of Osama bin Laden was attending a Carlyle conference at a Washington hotel.
A few years after that, the growing firm made a conscious turn away from government and toward the world of business. Legendary former IBM head Lou Gerstner came in as chairman, and Carlyle began expanding far beyond Washington.
Carlyle’s influence continues to permeate the halls of power. Federal Reserve Chair Jerome H. Powell is a veteran, as is Nasdaq chief Adena Friedman.
The firm owns or has owned companies as diverse as the Dunkin’ coffee and doughnut brand, Booz Allen Hamilton, Getty Images, and the Hertz car rental agency. Returns on the funds that buy and sell those companies sometimes run from 30 percent to 40 percent per year.
The investors who benefit from those returns are often big institutions, particularly large pension systems. The California Public Employees’ Retirement System is a major backer of Carlyle funds, and last year the Virginia Retirement System committed up to $1 billion to a Carlyle investment fund.
Eventually — in 2012 — the formerly clubby, private firm went public, selling shares after a complex transition overseen by the rapidly rising Youngkin.
The 6-foot-5-inch Virginian was well-liked by leadership, according to interviews with a handful of insiders, and played many roles at the firm. He was elected a partner after only four years, in 1999, then worked in London until 2005, setting up offices around Europe. When he returned to Washington, Youngkin led a Carlyle sector that made industrial investments.
“One thing that enabled him to rise up through the ranks was his capacity to absorb information. You can shovel gobs of information into his brain, and he can analyze it and spit it out in a useful and comprehensive manner. Glenn is astounding at that,” said Christopher Ullman, Carlyle’s longtime public face as its director of communications for nearly two decades before stepping down in 2018.
The long-term guy
Youngkin moved from the investment side of the firm into management in 2008. He helped oversee the stripping back of investments that helped Carlyle ride out the financial crisis, served as interim chief financial officer and eventually became chief operating officer.
Taking on those roles, another former Carlyle executive said, was something of a sacrifice for Youngkin — leaving behind the more exciting world of deals for the sometimes thankless task of corporate operations.
A former member of Carlyle’s management committee said Youngkin was willing to play that role because of his commitment to “a collaborative culture. . . . He was one of those principled leaders who sort of did what he was asked to do and was also inspiring. He would lead town halls, communicate [across the organization]. He was not sharp-elbowed whatsoever.”
The three founders made a momentous decision in 2017 to step back and name successors to run the company. Because their partnership had worked so well, according to insiders, the three envisioned continuing with a similar division of duties at the top.
They chose a newcomer — Kewsong Lee, a hard-charging New Yorker — to pair with Youngkin as co-CEO. Each had a role, with Lee as the aggressive dealmaker.
“Glenn was the long-term guy. He’d been there 25 years, he’d helped the firm grow, been overseas,” Ullman said. “He’d seen how all the pieces fit together. He was a culture carrier.”
One longtime Carlyle joint-venture partner, who spoke on the condition of anonymity to talk frankly about the firm, said Youngkin was smart and personable but not one to shake up the status quo. “A phrase that was kicked around is he’s like Wonder Bread dipped in whole milk,” the joint-venture partner said.
His role in management meant that Youngkin was no longer driving individual deals, but he said at a February campaign appearance in Virginia Beach that he would “own everything” that had happened during his tenure as a top executive.
As Ullman put it, private equity is like lion taming — when it goes well, it’s great; when it goes wrong, it can be catastrophic.
Carlyle had its share of both while Youngkin was there. The firm took a one-third stake in Dunkin’ in 2006, for instance, helped manage the brand as it opened more than 2,000 new stores across the country and then took it public in 2012 in a deal widely hailed as a success.
BoozAllen, similarly, grew significantly after Carlyle took a majority stake in 2008 and generated billions for the private-equity firm after selling shares to the public. In 2013, Carlyle took a minority stake in the headphones maker Beats, boosted its national distribution and then profited when Apple bought the brand just nine months later.
Carlyle’s stake in the nursing home chain ManorCare was a different story. During the five years of Carlyle ownership, ManorCare struggled financially and exposed its 25,000 patients to sometimes serious health risks, according to a Washington Post investigation in 2018. The firm declared bankruptcy after Carlyle and other investors extracted some $1.3 billion in value and left behind enormous debt, The Post found.
Carlyle owned a waste recycling company called Synagro that went bankrupt in 2013 after losing several municipal contracts. A former Synagro official pleaded guilty to bribing a member of Detroit’s City Council.
While those scenarios all unfolded during Youngkin’s time in management, insiders said he was not directly involved. Youngkin was said to have had a far more personal role in two significant deals involving infrastructure: the purchase of fossil fuel pipeline giant Kinder Morgan in 2007, and Carlyle’s successful effort to win a contract refurbishing Terminal One at JFK airport in New York.
His Democratic opponent in the governor’s race, former Virginia governor Terry McAuliffe, has criticized Youngkin over Carlyle’s record, saying the private-equity firm has done deals that resulted in jobs being eliminated or shipped overseas.
The Associated Press reported last month that Carlyle, under Youngkin, had invested in companies that moved at least 1,300 American jobs overseas.
But Youngkin’s campaign has pointed out that McAuliffe himself invested in Carlyle, including a stake worth several hundred thousand dollars in one investment fund in the mid-2000s.
A spokeswoman for McAuliffe said less than $5,000 remains in that investment and noted that McAuliffe was a passive investor — like someone parking money in a mutual fund — with no role in business decisions.
No golden parachute
Youngkin’s role at the company came to an end last summer. It was big news in the financial world when the man anointed by Carlyle’s founders to carry on their legacy decided to step down in September after less than three years sharing the top job.
Youngkin has said that he felt compelled to start a new life in politics, that he saw Virginia as being “in the ditch” and wanted to save it.
Two of the four former Carlyle executives interviewed for this article said that Youngkin had long signaled an interest in public service and that they were not surprised by his decision to leave.
The other two said his departure seemed to be hastened by friction with Lee, his co-CEO. They echoed reports in the financial press last summer suggesting that Lee’s more hard-charging nature never meshed with Youngkin.
“It was pretty well known that the two of them didn’t get along that well. . . . There’s always the shock of it, but it struck me as totally the right thing to do to get out,” one former Carlyle executive said.
There was no golden parachute for Youngkin, but he didn’t need one. In a firm with more than $230 billion of assets under management — nearly four times Virginia’s annual budget — money flowed freely to top executives. Though Youngkin forfeited more than $100 million in stock options, he received more than $12 million in compensation for 2020, $16 million the year before and $37 million the year before that, according to filings with the Securities and Exchange Commission.
Youngkin remains one of Carlyle’s top shareholders. A company proxy statement from April listed Youngkin as owning stock worth more than $335 million at its recent trading value.