SCHAPIRO: Divide and conquer was Youngkin’s M.O. even before politics | Opinion

There’s nothing malevolent about this. For Youngkin, it is a clever necessity for steering his program through a divided legislature. For now, the Republicans who control the House of Delegates would play in traffic if told by Youngkin. In the Democratic Virginia Senate, he’s eyeing the few free souls willing to break with the majority.

That’s why Democrats are wary of Chap Petersen of Fairfax City and Joe Morrissey of Richmond. They’re playing footsie with Youngkin on education, tax cuts and Cabinet nominations. It’s not clear what Petersen and Morrissey might trade with Youngkin for their votes. It’s probably something they didn’t get from Democrats when they ruled state government.

Divide and conquer was Youngkin’s modus operandi long before he landed in Richmond.

It will determine whether he can purge classrooms of masks and race-teaching; use the budget to punish localities for woke-driven cuts in police spending; create alternate schools to those, he claims, let down kids rather than raise them up, and win confirmation of his choice for natural resources secretary, a coal industry lobbyist who ran the Environmental Protection Agency for Donald Trump.

As co-CEO of the Carlyle Group, Youngkin made big bets that wresting control of this company or that one would yield fat dividends for himself, his partners and, after the private-equity giant went public, its shareholders. It worked time and again, though not without bursts of controversy, some of it tied to Carlyle’s hiring of Washington insiders when its subsidiaries were trolling for high-dollar federal contracts.

What Carlyle does best is peel from other companies – divide, if you will – holdings euphemistically labeled underperforming, buying them with borrowed money and paring their overhead, in part, through layoffs, to promote profits. Then, the hopped-up acquisition – conquered, if you will – is sold at a premium, allowing for prompt repayment of any loans, with the remaining proceeds tidily pocketed as profit.

A sweet deal for Carlyle was its acquisition in 2005 from a French wine and spirits company of Dunkin’ Donuts. Purchased for $2.4 billion in 2005 by Carlyle and two other private equity shops, the coffee-and-doughnut chain was taken public six years later, having significantly expanded its footprint and payroll. Stock sales generated a three-fold profit of $1.8 billion, divided equally among the three firms. Dunkin’ Donuts – now, simply, Dunkin’ – again went private in 2020.

Youngkin, who presumably laughed all the way to the bank over a deal that was all about unhealthy foods, must have still been chuckling over it as a candidate. Among the bumper stickers produced by his campaign was one that parodied the doughnut retailer’s slogan, signage and color scheme: “Virginia Runs on Youngkin.”

But divide and conquer may have contributed to Youngkin’s undoing at Carlyle.

Youngkin, who had run the company’s European operations from London and is credited with the $22 billion takeover of pipeline company Kinder Morgan ahead of the natural gas boom, took command of Carlyle in 2017 with Kewsong Lee. It was an uneasy power-sharing arrangement under which Youngkin would supervise operations; Lee, deals. Within three years, Youngkin would depart.

Depending on your perspective, he jumped or was shoved.

In language not easily interpreted as charitable, The Financial Times put it this way several days before Youngkin’s narrow victory over Terry McAuliffe, who had tried to depict him as a let-them-eat-cake plutocrat, much as Barack Obama would another financier, Mitt Romney:

“During Youngkin’s tenure as co-CEO, Carlyle failed to emerge from a stretch of under-performance, anchored by overly complex and costly global operations and poor investment performance, particularly in hedge funds and the energy sector, two areas where Youngkin had responsibility.”

It was in Carlyle’s best interest that Youngkin have a soft landing. Were he represented as the casualty of a power struggle or as less than savvy on investments, not only would his reputation have been dinged, but market confidence in the company could diminish.

Certainly, the latter hasn’t occurred. Carlyle shares have doubled in price since Youngkin left to go long on politics, underwriting his candidacy with $20 million from a personal fortune that exceeds $400 million, according to Forbes.

And then there’s Youngkin’s religious faith, from every indication a powerful force in his life – one shaped by an enduring conservatism.

Youngkin and his family attended a mainstream Episcopal church in Northern Virginia, a Democratic-trending region that in the early 2000s was ground zero in a legal fight between church leaders and several parishes that broke away to protest the denomination’s support of gay rights. That included the installation of a gay man as a bishop in the Northeast as well as the blessing of same-sex unions.

Youngkin’s spiritual views – for example, he opposes same-sex marriage, legalized by the U.S. Supreme Court in 2015, and largely sought to conceal his stance during the 2021 race – spurred him and his wife, Suzanne, to launch an independent Anglican church in McLean, Holy Trinity Church. It is supported by a foundation the couple started in 2016 and has an estimated $22 million in holdings.

In no small measure because of Youngkin’s financial generosity. Holy Trinity Church represents a conquest born of division, a sense – as with his political and investment strategies – that if you can’t join ’em, beat ’em.