Carlyle Group LP co-founder David Rubenstein said private equity firms rarely fire workers at the companies they acquire, disputing the allegation that they boost profits at the expense of U.S. jobs.
The Republican presidential primaries have drawn scrutiny to private-equity because of Mitt Romney, a candidate for the nomination, was an executive at Bain Capital LLC. Newt Gingrich, running against Romney, has said that Bain was “exploitative” and that its business is similar to “looting.”
Private equity firms seek to expand the businesses they buy, Rubenstein said in an interview on CNN’s “Fareed Zakaria GPS” program, scheduled for broadcast tomorrow.
“The reality is this: Private equity firms are very good at buying companies, improving them, strengthening them, actually increasing employment, in many cases,” he told CNN, according to a transcript released by the news network.
“Firing workers is rarely something that’s actually done,” Rubenstein said. “You know, the private equity statistics show that when you hire more workers, you actually make more money. So in the end, private equity firms are trying to hire more workers and actually make the companies bigger than they were.”
‘Looting a Company’
Romney’s career in the private equity business was attacked in a film paid for by Winning Our Future, the political action committee that supports Gingrich while operating independently of his campaign. Gingrich has also questioned whether such buyouts were akin to “looting a company,” drawing complaints from Republicans and business leaders.
Rubenstein, who donated $7.5 million last week to repair earthquake damage to the Washington Monument, said the way his industry has been depicted in the political arena is “disappointing if you’re in an industry that is actually adding value, creating jobs, making America more efficient in many ways and more effective in many ways.”
“I don’t think what happened to Bain, in terms of the criticism, is really that fair,” Rubenstein said. “They may have done some things I don’t know about years ago that aren’t the practice of today. Remember, much of what Mitt Romney did happened 20 years ago or more. And the practices of the industry have evolved.”