A personal story about private equity: David Mook
Source: Cleveland.com, Everything Cleveland By: Plain Dealer guest columnist
Watching from ground zero of presidential politicking, I, like most other Ohioans, can't escape the torrent of campaign ads excoriating private equity. Every few minutes, we are assaulted by some TV ad that suggests Bain Capital/Mitt Romney/private equity "cost me my job," "killed my wife" or "shot my dog." This reminds me of a joke: What's the difference between the devil and private equity? The devil uses less leverage.
I can't speak for everyone who has personally dealt with these so-called devils, but let me share my company's experience. Tom Weisz founded the software firm TMW in 1983. Tom left Hungary as a young boy when the Russian tanks rolled into Budapest. His family left with nothing more than the shirts on their backs. TMW is Tom's baby. I joined the company 25 years ago, and we have watched it grow so that our software now dispatches more than half-a-million trucks per day and we now employ more than 500 people, many of them right here in Northeast Ohio.
Back in 2005, Tom sold his business to Pamlico Capital, a private-equity company in North Carolina, and Peppertree Capital, a local Cleveland company. As you can imagine, all the employees were apprehensive, including me. The last full year before we sold, TMW employed around 100 people. We were afraid our new masters would cut the staff, leverage the business to the hilt, gut research and development, and do all sorts of untoward things.
But just the opposite happened.
For the past seven years, Pamlico has been an outstanding shepherd of our business. Walker Simmons and Scott Stevens of Pamlico and Kevin McGinty of Peppertree have been thoughtful, nurturing and caring board members. They are, of course, capitalists. But what good capitalists do is work to grow their businesses by treating customers well, developing talent in the company and expanding product offerings.
Pamlico is now completing the sale of TMW to Trimble Navigation Limited and has done very well for its investors. I say, "Good for them." By the way, Pamlico's investors range the full gamut from pension funds, banks, company management and wealthy people. All these people took a business risk with their own money. When such risks succeed, they should be rewarded.
￼ Pamlico also did very well for our 500 employees and 2,300 customers. It has left our business very healthy. We're growing at double-digit rates, and we're hiring more people -- many right here in Northeast Ohio.
Back to those TV ads. I, of course, don't know for a fact that those specific allegations are completely untrue. But I do know a few private-equity guys -- Scott, Walker and Kevin -- who are decent and honest businessmen. I also know it makes no sense for any business owner, whether private equity or otherwise, to squeeze a property to death. The owner's objective is always to grow so that the business is worth more.
Some business ventures fail, and that's sad. To earn money, you must take risks. Sometimes there are failures, just as sometimes, as in TMW's case, there are 500 people with good-paying jobs and investors who do well.
If you don't want to vote for Mitt Romney because you disagree with his positions, fine. This is America after all, and you are free to make up your own mind. (I'm actually an undecided voter myself.) But to disparage Romney because he and Bain Capital invested in companies is ludicrous.
Here's a new joke for you: What's the difference between cheap-shot political ads and the devil? The devil occasionally tells the truth.
David Mook is the head geek of Beachwood-based TMW Systems Inc.
Pamlico Capital is a private equity firm founded in 1988 that invests in growing middle market companies in North America. Pamlico Capital seeks control-oriented growth equity investments of up to $200 million alongside founders and proven leaders in its target industries: communications, healthcare, services and software. The firm, based in Charlotte, NC, has assets under management of almost $3.5 billion. For additional information, please visit www.pamlicocapital.com.