05/04/2012 09:28 pm ET Updated Jul 04, 2012

Bloomberg Businessweek Pulls a Bait and Switch

Financial media mavens were quick to accuse Bloomberg Businessweek of a bait and switch when its April 30 issue hit the street. There on the cover was a photo of a menacing, slickly dressed businessman wielding a chainsaw behind the headline "My Life in Private Equity." Inside, however, was a positive story about how a small private equity shop was using the much-celebrated Toyota Production System to improve efficiencies at manufacturing companies it owned. "Bloomberg Businessweek should be ashamed of itself," scolded's Dan Primack. He said that in the name of selling magazines, the rival publication went with a cover that's "a direct misrepresentation of what Businessweek put inside its own pages. Shameful."

With its blood-red lettering, grainy background and black-and-white imagery, the magazine invokes Patrick Bateman, the Wall Streeter/serial killer at the center of the satirical-novel-turned-horror-flick "American Psycho." That was no accident, as we learn from, a photography blog that notes the Businessweek team had settled on "American Psycho" to create an iconic image of Wall Street greed. Trouble is, the story doesn't appear to be about greed -- let alone Wall Street. It's not really about private equity, either.

The piece was written by Brendan Greeley, who joined a two-week boot camp run by Monomoy Capital Partners for managers of manufacturers in its portfolio. Four times a year, about 20 managers gather at a Monomoy-owned plant to suggest and carry out efficiencies based on Toyota's system, which itself stems from the Japanese concept of kaizen, or, as Businessweek explains, continuous improvement.

Greeley is impressed, especially after he personally helps create a more efficient way for orders to be communicated between the office and warehouse floor at Scottsboro, Ala.-based Heat Transfer Products Group, a maker of industrial refrigeration parts that Monomoy bought in 2010 from Carrier. ("I raise my hands in triumph," he reports.) There's been a net job loss of 75 at HTPG since it was acquired by Monomoy, but sales are up, as are on-time deliveries, thanks to kaizen. "To survive, you cut people," Greeley writes. "To grow, you cut waste."

That's the theme of the piece, which ends by concluding that when practiced this way, private equity is not "slash-and-burn liquidation, extracting money from capital" or "overleveraging, making profits off dividends paid out of unsustainable loans." Rather, it's "a brief victory for order in the constant slide toward entropy." That's a nice change from the old, pre-Bloomberg, Businessweek, which essentially declared PE a criminal enterprise. But does it shed light on PE's role in the economy -- a campaign issue thanks to Mitt Romney's tenure at Bain Capital -- as Businessweek, on its Politics and Policy blog, suggests? And what about that cover?

First, be aware that Monomoy, with $700 million in investments, is a totally different animal than global buyout giants like, say, Blackstone Group, with $190 billion under management, or Bain, with $27 billion. While Monomoy is undoubtedly a better example of most private equity middle-market deals done with little leverage, it operates in a different universe from the megafirms, where high management fees, dividend recaps and huge amounts of debt are the rule. Businessweek should have noted that that's what the media and politicians cartoonishly focus on when demonizing private equity.

Also, the story is less about private equity -- big or small -- and more about bringing efficiency to manufacturing, a standard practice in corporate America, particularly after a merger. That's supposed to be good, right? Sometimes the search for efficiency leads to job losses, which apparently led the magazine to put the chainsaw lunatic on the cover.

The image is so creepy it's hard to imagine it selling magazines. But Businessweek's covers apparently aren't for regular readers; it designs them for the rest of the media, which eats them up. A cover with two airplanes copulating? "Brilliant," according to FishbowlNY. Or, as The Atlantic Wire put it, a lesson on "how to make an old title -- for lack of a less cliché word -- hip."

In one of many fawning stories on the magazine's design, Capital New York quotes creative director Richard Turley on Businessweek's cover philosophy. "We kind of know that we have, visually anyway, boring subject matter. ... We just try to make it as interesting as we can." Hey, we're all for interesting. But try to keep it honest, too.

Yvette Kantrow is executive editor of The Deal magazine.