“Vulture” Capital? Far From It
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engineering a turn-around of a corporation’s fortunes. They apply a fresh perspective, capital, creativity, and hard work to re-imagining and re-making these struggling giants. It’s true that job losses sometimes accompany these transformations as managers work to fine-tune a level of business activity that they can profitably provide and support a foundation for future growth.
But a successful corporate restructuring preserves jobs, creates the opportunity to add more jobs in the future, and rewards investors (again, those same largely non-profit institutions). When the task proves too monumental, the investment is lost and so are many jobs, but that’s the same outcome that would have been experienced if the business had failed without an attempted turnaround.
Make no mistake about it—high risk/high return investing is hard work and not always successful. But often it is successful, raising the question of how the U.S. would benefit as a society if managers were not prepared to assume risks with their time, talent, and capital.
There are some bad actors in all areas of endeavor, and venture capital and private equity investors cannot claim to be exempt. Private equity investors, in particular, may sometimes try to tweak the system for a quick return at the expense of workers. But they are the exception. The politics of class division and “us” versus “them” are the politics of self-destruction.
With a globalized economy, energized competitors around the world, and serious fiscal challenges at home, it is as important as ever to support promising entrepreneurs with venture capital, celebrate their success, and encourage those who have failed to try again. This is no time, either, to dissuade private equity investors from trying to turn around established companies. Fostering the creation of new companies and fixing big companies is the American Way. Failure to do so runs the risk of repeating the lessons learned by England in the 1960s, when class warfare and an assault on capital led to a prolonged depression and loss of stature in the global economy. At this critical point in the history of our country, it would be refreshing to see the energy being put into distorted and patently false attacks on the most creative elements of our economy placed instead in constructive ideas to grow our economy.