Private equity's choice: Obama or Romney | Timberland Investment | Scoop.it

In 36 hours or so, we should know if America has elected its first-ever private equity president. Or if it's reelected the guy who campaigned, in part, by criticizing some of private equity's more controversial practices.


Based on the rhetoric, it seems obvious that Mitt Romney should be the choice of private equity professionals who vote their business interests. But I'm not so sure that it's quite so clear-cut.
For starters, future private equity success will depend more on a vibrant economy than on any industry-specific policy. Not only because a rising tide lifts portfolio company financials (and, in turn, sale prices), but also because private equity relies on capital commitments from a wide swath of institutional investors (public pensions, college endowments, corporations, family offices, nonprofit foundations, etc.).


So if a private equity voter is convinced that Romney's economic policies are best for broad-based prosperity -- both in America and worldwide -- then he should be the pick. Same goes for Obama.
And before calling this a cop-out, two opposing pieces of data: Romney has raised far more money from private equity execs than has Obama, and also seems to have their ballot box support. At the same time, Cambridge Associates reports that private equity has generated 16.62% benchmark returns in the three years between June 30, 2009 and June 30, 2012. That's better than the private equity benchmark for any other time period that CA measures, and was based largely on a public equities market that has thrived under Obama's watch.


Again, not clear-cut. And macro economic prognostication is an educated guessing game, at best.