Private Equity Firms Navigate Tougher Markets; Execs Like Josh Bekenstein and Greg Brenneman Still

The Wall Street Journal recently reported that private equity firms are weathering the financial storm somewhat better than their investment banking counterparts .

The Wall Street Journal recently reported that private equity firms are weathering the financial storm somewhat better than their investment banking counterparts (http://blogs.wsj.com/deals/2008/09/03/private-equity-compensation-what-credit-crunch/). Although storm clouds seem to lie ahead, the WSJ reports that hiring has been strong throughout 2008 and total executive compensation has risen 27% since 2006. That’s good news for top private equity executives (http://www.towersperrin.com/tp/showdctmdoc.jsp?country=g ...). A Google search on the big names in private equity brings up articles such as “Private Firms Lure Chief Executives With Top Pay” (http://www.nytimes.com/2007/01/08/business/08private.html) from the New York Times. This is not to say that private equity or America’s high-profile executives have gotten through broader economic problems unscathed. That same New York Times article discusses the anger of shareholders in companies like the Home Depot (http://www.homedepot.com/), who ousted Robert L. Nardelli (http://www.msnbc.msn.com/id/16469224/) – Home Depot’s former chief executive – over his salary, which the shareholders considered exorbitant. Other executives, like Millard S. Drexler (http://www.google.com/search?hl=en&rls=com.microsoft%3Aen-us&q=millard+drexler), former executive of the Gap (http://www.gapinc.com/), have reaped the benefits of private equity’s success as well. After being recruited by private equity powerhouse TPG (http://www.texaspacificgroup.com/) to put J. Crew back on its feet (http://query.nytimes.com/gst/fullpage.html?res=9D02EFD61231F937A35755C0A9629C8B63), Mr. Drexler received – by the New York Times’ estimates – well over $300 million in compensation. The same goes for Mark P. Frissora, who was offered the chief executive position at Hertz Rent-a-Car (http://www.hertz.com/), a company owned by a number of private equity firms, including the Carlyle Group (http://www.carlyle.com/), Clayton, Dubilier & Rice, and an investment arm of Merrill Lynch. A few months later, Mr. Frissora was more than $30 million richer. Although the private equity world is still relatively healthy despite widespread anxiety about the state of the economy (http://peaoutlook.dowjones.com/), industry executives are candid in their appraisal of private equity’s future. Earlier this year, some of private equity’s biggest names, including the Ford Foundation’s Eric Doppstadt (http://www.google.com/search?hl=en&rls=com.microsoft%3Aen-us&q=eric+doppstadt), The Carlyle Group’s Louis Gerstner, Jr., Deutsche Bank’s Vinay Pande, Apollo Management’s Josh Harris, and Bain Capital’s Steve Pagliuca joined in a discussion on the state of the industry (http://www.reuters.com/article/pressRelease/idUS195066+08-Jan-2008+PRN20080108). The consensus seems to be that the outlook is mixed. Depending on the private equity firm, the next year will either be another year of great fortunes for top execs or a year of belt-tightening. For names like Kohlberg Kravis Roberts (http://www.kkr.com/), CCMP (formerly J.P. Morgan Partners), and Bain Capital (http://www.baincapital.com), however, it looks like the coming year might leave them in a better position than many of their competitors. Private equity execs like CCMP’s new hire Greg Brenneman (http://online.wsj.com/article/SB121919300395955197.html?mod=googlenews_wsj) – formerly the chief executive of Quiznos – and Bain Capital’s Josh Bekenstein (http://www.forbes.com/finance/mktguideapps/personinfo/FromPersonIdPersonTearsheet.jhtml?passedPersonId=934735) look to help steer their companies towards greater profitability. Bain Capital, where Josh Bekenstein (http://www.linkedin.com/_____), one of the firm’s co-founders (http://www.baincapitalprivateequity.com/team/index.asp?viewType=ByRegion&d_Bio_ID=67) works as a Managing Director, is part of the team responsible for making big-name deals with Bright Horizons Family Solutions, Domino's Pizza, Sealy, Guitar Center, Burger King, Bombardier, Toys R Us, and dozens of other companies (http://en.wikipedia.org/wiki/Bain_Capital#Recent_Notable_Investments). Experienced executives like Josh Bekenstein will help their firms navigate the credit crunch and global economic slowdown. With more than 20 years at Bain Capital under his belt, Josh Bekenstein has seen his fair share of industry fluctuations. Josh Bekenstein also embodies the philanthropic commitment, devoting time and support to causes like Horizons for Homeless Children (http://www.horizonsforhomelesschildren.org/) and City Year (http://www.free-press-release.com/news/200808/1218653821.html). CCMP’s Brenneman, who steered Quiznos and Burger King through difficult times while helping these businesses grow (http://brandautopsy.typepad.com/brandautopsy/2005/05/greg_brenneman_.html) despite stiff competition, is known for being a strong team leader and motivator. Although a tough road may lie ahead due to fallout from the credit crunch (http://dealbook.blogs.nytimes.com/2008/09/03/private-equity-tumbles-in-new-establishment/), the resilience and skill of executives like Greg Brenneman and Josh Bekenstein can help CCMP and Bain Capital move through the next few years in good shape.