Mick Mulvaney Offers Insights on U.S. Government Involvement in the Private Sector

The federal government has made sizeable investments in several private companies and is steering inbound foreign investment — the most significant U.S. government involvement in the private sector outside of wartime economies. Mick Mulvaney, first-term Trump White House chief of staff and former director of the Office of Management and Budget, joins Skadden M&A partner Ann Beth Stebbins to explain what this means for corporate boards.

Although some companies are actively seeking government capital, Mulvaney point to potential dangers as he views the government as “dramatically less disciplined than the private sector.” He predicts the trend of government as a source of private capital will continue regardless of which party controls the White House, representing a fundamental shift in how both Republicans and Democrats view the government’s role in the economy.

Mulvaney warns companies to think carefully before taking government money. Do businesses truly understand what it means to have Uncle Sam as a co-owner on their board? What happens when administrations change and policies shift, he asks?

Ann Beth points out that none of the deals to date include redemption features, so companies cannot easily buy back government stakes. Even if there were a redemption feature, Mulvaney adds, it could be difficult to exercise that if the government does not want to be bought out. “How would you feel about it — when you have to have a relationship with the government in your business — how would you like to [be] at that point?” he asks.

Having policies to promote national and economic security makes sense, Mulvaney says, but there are “other things the government can do that do not involve the actual ownership of the means of production.”

Mulvaney supports the Trump administration’s negotiating with countries such as Japan and South Korea to direct investment into the U.S. in exchange for access to the U.S. market.

He says that we have only seen the first moves on all these fronts. “They’re going to continue to pursue government ownership of private companies and at the same time are also going to continue to try to encourage more direct foreign investment and then look for places for Americans to invest overseas…. [W]hat you’re seeing now, you’re going to get for the last three years and three months of this administration…. because they are absolutely committed.

💡 Meet Your Host 💡

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Featured Guest

Name: Mick Mulvaney

Title: Senior Advisor, McLarty Associates

Connect: LinkedIn

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