Rami Cassis, Founder and CEO of his family office Parabellum Investments, has today issued a warning that the private equity sector must start taking its image problem seriously and take immediate action to improve it, or risk damaging restrictive regulation.
Cassis has called on the private equity sector to start caring about its image problem and commit to improving its public perception. He says the sector’s negative image is restricting its potential to have a positive impact on the global economy, citing the intention of the Biden administration to crack down on the industry through antitrust laws.
The investor’s intervention follows news that President Biden has appointed senior members of the DoJ’s antitrust unit and US Federal Trade Commission, who seek to crack down on the private equity industry. The decision could be one of the biggest shifts in the history of US competition policy, according to antitrust experts.
Cassis wants to see private equity firms commit to improving the industry’s image. He says this should start with firms significantly increasing the professional diversity among their key decision-makers, to give the industry a more rounded and human approach. He adds that firms must also place greater emphasis on producing social value through its investments and offer greater transparency around its deals and strategies to rebuild trust.
Rami Cassis is an international private equity investor who deploys his own capital into mid-market firms. He is a hands-on investor who takes an active involvement in his portfolio companies, providing strategic advice and guidance to company leaders, using experience gained through his extensive background in operations.
Rami Cassis said:“Private equity can – and should be – a force for good in the global economy. It plays a key role in generating growth, wealth, and jobs, and it has a vital role to play in determining the depth of the current economic downturn.
“But unfortunately, the industry has garnered negative public perception over many years – projecting an image of itself as bullish, secretive, and opportunistic. This seemingly unshakable image problem, and the largely absent desire to fix it, is holding the industry back.”
A report by leading consulting firm Ernst & Young (EY), revealed the US private equity sector directly generated $1.4 trillion of GDP in the United States in 2020, comprising approximately 6.5% of the US economy’s total GDP.
Cassis continued: “If the private equity industry is to realise its full potential and avoid damaging regulation, industry leaders must start taking public opinion seriously and take action to lift its reputation. The intention of the Biden administration to crack down on the private equity industry is a prime example of the need for immediate change.
“The most effective way firms can do this is to significantly increase the professional diversity among their key decision-makers. Private equity tends to be dominated by bankers, lawyers, and accountants. This is not a problem as such – but huge value can be added by increasing diversity here.”
“Firms should bring in more experts with backgrounds in HR, tech, marketing, and data – to name just a few – into senior positions. This would drive a more holistic, dynamic, and human approach to investments in the industry, right from the top.
“Experts with a background in HR, for example, would ensure employee well-being, morale, and retention in portfolio companies remains front and centre, improving public perception and aiding in organic growth at the same time.”
“The industry must also place a greater emphasis on generating social value through its investments and offer more transparency around its deals and strategies to rebuild trust. Leading private equity investors should be going out on the airwaves to tell people why the industry benefits society, admit the mistakes that have been made, and explain their strategies for amending this.”