this morning, what is one of the world's top private equity firms? think of the recent spotlight on the industry. joining us on set, scott sperling, and we also have pizza on set. when i leave i'm going to take one of those whole pizzas with me. domino's still owned by bain.
i think they still have a piece. i thought you were going to say a slice. it's a private joke. okay. so we had henry kravis on last week. i know you're a support of governor romney for president. are you frustrated that he has not more forcefully come out and supported not only the industry but defended what you do day in and day out? i don't think it's his job to defend private equity and i don't think we should be particularly offended by the attacks specifically on private equity.
i think the more worrisome issue and one sounds he's addressing forcefully is a set of flot the flow fees and policies that followed that. the recovery has been the weakest we've ever seen. it's normally in the case of a deep recession you come out with stronger growth rates, not weaker growth rates and we haven't seen that, attributable to philosophy, policy, a whole set of things that is what he should be addressing, not whether or not private equity were good guys or b guys.
we're big boys and girls as they say and we should be able to take that. how many conversations do you have a day about the image of private equity, given romney being in the spotlight? how often do you have to talk to pension funds about these issues? how big a role of it is in your business? i think they understand the facts, because they've lived through it and they have depending in an increasing way on private equity to generate the returns they need to meet their pension obligations but what i think they've seen and what they recognize is the best way for to us make money for investors is growth, and that's one of the things that has most impacted us in this economy, obviously there's a lack of growth so we have to work even harder to try to find ways to stimulate growth in this environment.
it's not by cutting companies. it's really by trying to build these companies up. now, in many cases because we compete in the global environment, we have to make companies more competitive, but i think almost every one of our companies has gotten not only more competitive in terms of its cost structure but has actually grown faster than before we owned them and i think that's true throughout the industry, and i think if you look at these companies they tend to take market share and they weather downturns in ways that people may not anticipate. if you go back to '07, not trying to jinx anything here but moody's predicted most of the companies industry owned would fail. right. obviously they haven't, and hopefully if we don't have another major recession of that size -- what are some of the companies they thought would fail that are thriving? clear channel is a company identified early on that is actually taken market share every quarter we've owned it.
we've been able to build a management team i think that has done a spectacular job at generating higher levels of revenue and profitability people expect and position the company to take advantage of the limited upturn in the economy we've seen and bob pittman is doing a phenomenal job outside the account, not just the board, on this. these guys have had better returns over the past 30, 40, years since the beginning of the industry, then the stock market. right. you have been a bull, though, on the market, on the stock market more broadly. right. are you a bigger bull on private equity? i think private equity is a positive thing, and i think even the academic literature shows that private equity can surpass the general market and indexing. it's not as liquid.
it's not for everybody, and you can get some bad apples there, but no, i'm very positive on private ek withity. the flipside, some people suggested if you levered up the s&p the way you lever up a company you might get to the same place. do you disagree? it would be interesting to hear what the quantification of that, but i suspect the problem is when you just lever up, then you can't manage through the down time, the downturns and that's when you see margin calls and all sorts of bad things happening. when we lever a company we're doing it in a way where we're also hands on in terms of dealing with the ups and downs that company has so that we, in fact, can manage through the kind of period we saw in '08 and '09. when we were looking at companies in '06, for example, we felt that the environment was starting to get pretty pricey, largely based on the credit markets driving prices to a place that we hadn't seen in a while. we started to pull back a bit.
when we bought companies in that period we anticipated that sometime we didn't know if it was '08 or '09 there would be a normal recession. it was dramatically worse than anticipated. as you know, the advertising industry for example it was five or eight times worse depending on the definition. who would have thought the entire too industry would stop advertising? you have to manage through that. and the financial system. and the financial system. if all you did was put a debt on a passive index you'd be in trouble i think. so getting back to defending private equity, given that -- no, but it was a question then, given that pension funds and institutional investors have been the beneficiaries of all this, why have they not come out more publicly? i'm curious.
are you surprised on that front? look, i think there are political realities and then there are the realities of having to meet their obligations, and i think the political realities would suggest it's not their fight. it's not appropriate. it doesn't necessarily help them to go out and say private equity has been great, but if you look at what they're doing, take a look at their actions, they're not pulling back from investing in private equity. if you look at most of the major pension funds at least in this country you have something like an 8.0 or 8.5% return objective which they don't think they can make with purely public securities in their portfolio. what is the biggest sized deal you can make in this environment, talk about the mega deals of 2006 and 2007, those seem to have gone away. what is the biggest transaction we could see your name attached to? we did a $2.7 billion transaction, that's about as big. maybe a $5 billion transaction. credit markets are still strong, you can finance it.
the amount of quantum debt is not available the way it was back in the 2007 period and that's not necessary as a result a bad thing. i think it's been healthy for the industry to pull back in terms of the size of things that we're doing. scott, we have to run but one last quick question, you were still a private, private equity company. yes, we are. many have gone public. would you own shares ever in a public private equity firm like your rivals, kkr, blackstone, et cetera? i'm overweighted in private equity exposure so i'm not sure i would personally do that, not trying to duck your question too much but you know, look, they're building big asset management firms that, i know obviously know the people running them very well, i think, they're exceptional managers and so as you look at the universe of public stocks to buy, i wouldn't believe that you should shy away from them. they're an interesting place. scott thanks for coming. take some pie on the way out. i'm going to.
Benny quetell
@resilient_ent resilient media
entertainment private equity
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