Is DC synonymous with PE?

by Michael Roth

What do you call a go-getter who likes to be in charge of things? A politician? A PE exec? Both are right!

That is why at Bison, we are not surprised by the media’s reporting of Tim Geithner joining Warburg Pincus as their President. The news may be a surprise to the February 2013 version of Geithner but he is not the first (and he won’t be the last) former politician to jump to the private equity world.

In the hyper competitive world of private equity, firms are always looking for an angle or an edge. For many of the larger firms, that has meant hiring a former politician who has one or more of the following attributes: they bring an air of importance; they have a large rolodex; or they have insights into the regulatory framework that GPs are navigating on a day-to-day basis.

What’s unique about Geithner’s role is that it does not appear he is being brought in just for his connections but also to run the firm. Oftentimes, they are brought in as an advisor of sorts, like Evan Bayh with Apollo, or Wesley Clark with Blackstone’s energy team.

Other firms have liked what they’ve gotten from these former politicos that they have added two! Here’s looking at you Cerberus and KKR.  Dan Quayle and John Snow (not to be confused with Jon Snow, you Game Of Thrones fans) both have senior leadership roles at Cerberus as Chairman of Cerberus Global Investments and Cerberus Capital Management, respectively. Meanwhile, Ken Mehlman has been the Global Head of Public Affairs at KKR for five years. KKR was also in the news this year for hiring Gen. David Petraeus to lead their new Global Institute which will look at what impact public policy, macroeconomic and geopolitical issues may play in their investment efforts.

Notably absent from this group is DC headquartered Carlyle Group. With an address at 1001 Pennsylvania Ave NW, they are just a hop, skip, and leap from the White House. While their knowledge of the political realm is still one of their strengths, the Firm has made efforts to shed the image of a firm that is deeply tied in to the political scene. Besides David Rubenstein who was a former political operative for President Carter, the firm once had former US President, George H. W. Bush, former US Secretary of state, James Baker III, and former Chairman to the SEC, Arthur Levitt, on the payroll (just to name a few).

This is just a brief account of those who have moved to private equity and does not even touch on the PE execs who have tried their hand as a politician (Mitt Romney, Bruce Rauner). So we’re sorry, Mr. Geithner, you aren’t doing anything too new.