If You Love Delicious Cake Snacks, Stop Hating on Private Equity

The "Twinkie Defense" of America's most hated-on profession.

Photo: CBS News

Photo: CBS News

It may have come about a year too late, but according to Slate writer Timothy Spangler, Twinkies’ return from the dead may be the best defense Mitt Romney could have asked for. Spangler’s argument is simple: you can hate Bain Capital and everything it stands for, or you can calmly accept that the private equity companies that everyone accused of ruining the economy six months ago can actually be kinda useful.

In this case, Twinkie (and Ho-Ho, and CupCake, and Ding-Dong) parent company Hostess drove itself into bankruptcy with archaic business practices and cumbersome union contracts. Now, Twinkies are available in tens of thousands of convenience stores across the country, with tens of thousands more to come. For that, we can thank C. Dean Metropoulos & Co. and Apollo Global Management, which are—you guessed it—private equity firms.

Spangler’s defense is blunt and pretty convincing:

“Simply put, future generations will have access to their snack cakes of choice because carried-interest-earning private equity funds, staffed by current or aspiring members of the 1 percent, provided the financial lifeline that no one else could.”

Sure, Hostess’s new management fired 18,000 people in its redo of the supply chain, but it was either that or keep the entire company (and tens of thousands more jobs) off the market forever.

The rest of the article is a pretty dry survey of the relative merits and justified criticisms of private equity, but let’s be real here: if there’s any way to make finance writing interesting, it’s adding Twinkies. Oh, and a subhead like this one: “Private equity may be a vampire, but that vampire saved your snack cakes.”

[via Slate]

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