It doesn't have to be that way -- or, at least, that was the argument put forth by one of the private-equity world's leading up and comers in a Q&A here at the Association of National Advertisers' annual conference. (See video excerpts.)
Kinder, gentler private equity
Anton Levy, a managing director at General Atlantic, made the case for the notion of kinder, gentler private-equity relationships with brands, partnerships that respect the fabric of companies and, rather than snatching away independence actually foster it. Mr. Levy, whose firm recently took a majority stake in digital agency AKQA, presented what amounted to education campaign for his trade, explaining the variations among different kinds of firms, from the leveraged buyout focused firms focused on mature brands to growth investors like General Atlantic to the venture capital outfits that fund startups.
The topic is increasingly important as these financial players buy into major brands and the agency businesses. In recent years, acquiring stakes in a range of companies from Chrysler to Hertz to DoubleClick. Chatter around the topic hasn't been quieted by the ongoing credit crunch caused by the subprime mortage meltdown that has slowed down a once frenzied market for private equity deals.
Mr. Levy, in a dialogue with Media Link CEO Michael Kassan, acknowledged that private equity gets a bad rap, but argued that cases such as AKQA offers evidence contrary to that. He said that General Atlantic has added search marketing and media-planning and -buying to the agency arsenal. He said General Atlantic also offers industry-specific guides its companies on how to add value from teams of industry-specific experts.
At the same time, he acknowledged that private-equity ownership requires a different way of thinking about brands, not least thinking about how brands can expand geographically and across categories. The flip side of that is that a private-equity exit can help a brand that might just be an under-appreciated piece of a larger portfolio gain some independence.
Thanks to the subprime crisis, Mr. Levy said he expects credit markets to "be choppy to through early next year," but he doesn't expect that to cool the interest in advertising, especially the digital part of the business. "The valuations of premium businesses will remain robust, irrespective of the credit environment," he said.
All in all, the Q&A offered some financial fresh air for an industry event that doesn't typically stray to far into the deal-making world. Not everyone bought it, but given the immense curiosity around private equity on all sides of the business, it's a safe bet that it opened some eyes. As Mr. Kassan said, "Businesses have to keep their eyes on the exit."