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Carlyle Group’s Rubenstein Predicts Social Media Activism

For many private equity players, social media is simply an investment opportunity. But as Mideast revolutionaries embrace Facebook and Twitter as a tool, David Rubenstein, founder and managing director of the Carlyle Group wonders whether shareholder activists will take their fights online, too.

Speaking at the SuperReturn conference that opened Tuesday, Mr. Rubenstein predicted social media activism will change the industry — he just doesn’t know how.

“Let’s suppose somebody wants to buy a company and has to get shareholder approval,” Mr. Rubenstein said. “Employees and shareholders could use Facebook to rally support against an acquisition. We’ve never seen that kind of thing before. But it could happen.”

Quoting Donald H. Rumsfeld, the former Defense secretary, Mr. Rubenstein tried to define the industry’s “known unknowns” (things private equity investors know they don’t know). Among them: the effect of the Mideast unrest, the debt problems in the United States and social media sites like Twitter and Facebook.

“We don’t know the impact of social media on private equity. But it’s very hard to believe that the Facebook revolution can change the world” and not impact private equity, he said. “Private equity cannot operate isolated. I think there will be some impact of social networking on private equity, but I just don’t know what it will be this year.”

In his speech, Mr. Rubenstein showed a positive picture in the industry, saying deal-making was reviving, even if fund-raising remained somewhat difficult. He also noted that private equity had come through the financial crisis largely unscathed.

Still, Mr. Rubenstein cautioned the industry not to get too comfortable, lest it once again be demonized as it was during the heyday when buyout specialists were labeled “barbarians” and “locusts.”