Photo: Gage Skidmore on flickr
One of the biggest early story lines in this year’s presidential election is Mitt Romney’s private equity resume.For Romney, it’s proof that he is a successful businessman who can fix broken companies. In theory, America is a broken company that could use a turnaround expert, and Romney is just the guy for the job.
The problem with this story line is that it conveniently skips over the fact that private equity skills are significantly different than governing skills. In fact, what works for private equity can’t work for public governing.
The way private equity generally works is that it finds a distressed company, buys it, takes it private then fires all the managers and puts in its own people. The whole process is tightly controlled by the private equity firm. It is intentionally cutting out anyone who disagrees with its ideas.
As President, Romney will not have the same luxury. He will have to deal with a pack of hyenas who all have their own ideas about what makes sense. We call these people Congressmen.
Unfortunately for Romney, he can’t just take the USA private and ditch those folks. He has to figure out how to work with them.
Could he do it? Certainly. But if he can do it, it probably won’t be because of his training in private equity.
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