Isn’t it nice when the good guys win? That was the media’s verdict on Bain’s recent failed private equity buyout of mutual insurer LV=. Here, it was widely agreed, was a triumph of responsible capitalism over what Nicholas Shaxson, co-founder of the Balanced Economy Project, described in The Guardian as private equity “blood-suckers that load healthy companies with debt, then asset strip them, leaving lifeless husks”.
Ah, if only life were ever that binary. The slightly messier reality is that 10% of LV= members voted for the Bain bid, 5% voted against, and 85% of the insurer’s million or so members didn’t bother to vote at all. In other words, Bain’s offer generated more patriotic outrage in the business pages of national newspapers and the House of Commons than among LV= members. The Daily Mail’s business editor, Ruth Sutherland, even likened the saga to the feelgood Christmas movie It’s a Wonderful Life in which James Stewart plays George Bailey, the troubled mutual savings manager who rediscovers the spirit of goodwill.
This Panglossian perspective overlooks the fact that most analysts agree that if LV= directors had handled Bain’s bid more adroitly, it would have been accepted. (The decision to bar the media from the decisive online shareholders meeting was just one last misstep of many.)