Skip to main content

Freedom Group, a gunmaker ripe for an ethical takeover

By John MacIntosh, Special to CNN
updated 10:16 PM EST, Thu December 27, 2012
Several .223 caliber rounds near a Bushmaster XM-15; the manufacturer's owner is putting its gun companies up for sale.
Several .223 caliber rounds near a Bushmaster XM-15; the manufacturer's owner is putting its gun companies up for sale.
STORY HIGHLIGHTS
  • The owner of America's largest gunmaker is putting firm up for sale
  • John MacIntosh says billionaires should lead effort to acquire the gun manufacturer
  • He says they should change corporate practices to discourage violence
  • MacIntosh: One leading company could push gun industry in a more ethical direction

Editor's note: John MacIntosh was a partner at Warburg Pincus, a leading global private equity firm, where he worked from 1994 to 2006 in New York, Tokyo and London. He now runs a nonprofit in New York.

(CNN) -- In the 1970s and '80s, when corporate America was plagued with inefficiency, a new class of financially motivated takeover investors emerged to prey on the fattest in the corporate herd and scare the rest into line.

Today, as pockets of corporate America are plagued with immorality, we need a new class of socially motivated takeover investor to prey on the sociopaths in the corporate herd, turn them around and perhaps scare (or shame) others into line.

John MacIntosh
John MacIntosh

The upcoming sale by Cerberus Capital of the Freedom Group, the largest gun manufacturer in the United States, is a perfect opportunity to usher in this new era of muscular, socially responsible capitalism:

First, Michael Bloomberg, George Soros, David Geffen and the like should establish a nonprofit SPAC (Special-Purpose-Acquisition-Company) called BidForFreedom.org (BFF) with a mission to reduce needless deaths through gun violence in the United States and encourage the passage of sensible gun control regulations.

Become a fan of CNNOpinion
Stay up to date on the latest opinion, analysis and conversations through social media. Join us at Facebook/CNNOpinion and follow us @CNNOpinion on Twitter. We welcome your ideas and comments.



They should appoint George Clooney, Angelina Jolie and Matt Damon to the fundraising committee and recruit a loud-mouthed, poison-penned, but good-hearted activist hedge fund titan as chief investment officer (Bill Ackman? Dan Loeb?).

Opinion: Forgotten victims of gun violence

To be credible, BFF will probably need to start with at least $250 million in cash and commitments (no problem given the billionaire status of the sponsors) with additional firepower raised as needed from well-heeled individuals, foundations and through a broad-based Internet solicitation to an outraged-by-Newtown public.

Second, BFF should lobby all public pension funds that are part owners of the Freedom Group (by virtue of their investment in Cerberus) to roll their investment into BFF to reduce the need for outside funding, naming and shaming any unwilling public investors.

Newtown shooter's guns

Can't 'legislate against evil'
Miller: Buy guns, boost economy
Fiery debate over guns in America

Third, BFF should pay "whatever it takes" to acquire control of the Freedom Group in the upcoming auction by Cerberus (which has a fiduciary obligation to sell to the highest bidder) and then immediately implement a "moral turnaround" plan under which the Freedom Group:

(i) Appoints a high-profile CEO with impeccable credentials as a hunter and/or marksman who is nevertheless in favor of gun-control.

Opinion: Guns endanger more than they protect

(ii) Elects a new board of directors including representatives from the families of victims killed in Newtown (and/or other massacres perpetrated with Freedom Group weapons), military veterans and trauma surgeons with real experience of human-on-human gunfire, and law enforcement and mental health professionals.

(iii) Operates the business as if sensible gun laws were in place (this may turn out to be a wise investment in future-proofing the company): discontinuing sales of the most egregious assault weapons and modifying others as necessary so they cannot take huge-volume clips; offering to buy back all Freedom Group assault weapons in circulation; micro-stamping weapons for easy tracking; and providing price discounts for buyers willing to go through a background check and register in a database available to law enforcement.

(iv) Voluntarily waives its rights to support the NRA and other lobbying groups.

(v) Creates a fund to compensate those who, despite its best efforts, are killed or wounded by its weapons.

(vi) Agrees that if the effort to provide moral leadership in the weapons industry doesn't succeed within a year, BFF should consider corporate euthanasia, even though it entails a risk of allowing more retrograde manufacturers to fill the void in the market left by the then-deceased company.

Opinion: The case for gun rights is stronger than you think

In the face of horrors like Newtown, BFF would recognize that it's time to take a stand by acknowledging the impossibility of reaching closure after such a monstrous act while an unreconstructed Freedom Group continues to sell a huge volume of guns and ammunition rounds each year even if it is operating under new owners.

Like any Trojan Horse strategy, this is a long shot, but it must be tried. History suggests that only after the first company "turns" will an industry gradually return to the realm of the human (think of big tobacco). And without the tacit agreement, if not the outright support, of at least one important insider, policymakers seem utterly unable to pass tough regulations in the face of the predictable but withering assault by industry lackeys shrieking that any such regulation would be "impossible, impractical or too expensive."

In the face of a recalcitrant industry, we have to acknowledge that it is only the market for corporate control -- the real possibility that an outsider will take over one of the companies -- that puts limits on the behavior of board members and executives who, while perhaps decent enough in their family lives, display a limitless tolerance for the "banality of evil" at the office.

Opinion: Not man enough? Buy a gun

We must accept that the conventional, kid-gloves approach to socially responsible investing -- divesting shares in "bad" companies that nevertheless continue to exist -- is too weak an instrument to force change and its well-meaning practitioners too soft to enter the fray when emotionally and politically charged battles need to be fought.

And regardless of the viability of socially motivated takeovers in general, the Freedom Group looks like a great target. Cerberus is a motivated seller, the political macros look favorable, and it's a bite-sized company compared with many of the larger sociopaths in the corporate herd.

I'm even cautiously optimistic that the current impasse over gun regulation is a bad-equilibrium that few consumers actually want, and that a reconstructed Freedom Group, fighting for sensible change as a fifth column from within the industry, might well find that many people -- even a significant portion of the NRA's members -- would buy from a truly responsible (and high quality) gunmaker if given the chance.

All in all, it's a pretty exciting deal, so if Mike and George are up for it, count me in.

Follow @CNNOpinion on Twitter

Join us at Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of John MacIntosh.

ADVERTISEMENT
Part of complete coverage on
updated 6:11 PM EST, Thu December 18, 2014
President Obama has been flexing his executive muscles lately despite Democrat's losses, writes Gloria Borger
updated 2:51 PM EST, Thu December 18, 2014
Jeff Yang says the film industry's surrender will have lasting implications.
updated 4:13 PM EST, Thu December 18, 2014
Newt Gingrich: No one should underestimate the historic importance of the collapse of American defenses in the Sony Pictures attack.
updated 7:55 AM EST, Wed December 10, 2014
Dean Obeidallah asks how the genuine Stephen Colbert will do, compared to "Stephen Colbert"
updated 12:34 PM EST, Thu December 18, 2014
Some GOP politicians want drug tests for welfare recipients; Eric Liu says bailed-out execs should get equal treatment
updated 8:42 AM EST, Thu December 18, 2014
Louis Perez: Obama introduced a long-absent element of lucidity into U.S. policy on Cuba.
updated 12:40 PM EST, Tue December 16, 2014
The slaughter of more than 130 children by the Pakistani Taliban may prove as pivotal to Pakistan's security policy as the 9/11 attacks were for the U.S., says Peter Bergen.
updated 11:00 AM EST, Wed December 17, 2014
The Internet is an online extension of our own neighborhoods. It's time for us to take their protection just as seriously, says Arun Vishwanath.
updated 4:54 PM EST, Tue December 16, 2014
Gayle Lemmon says we must speak out for the right of children to education -- and peace
updated 5:23 AM EST, Wed December 17, 2014
Russia's economic woes just seem to be getting worse. How will President Vladimir Putin respond? Frida Ghitis gives her take.
updated 1:39 AM EST, Wed December 17, 2014
Australia has generally seen itself as detached from the threat of terrorism. The hostage incident this week may change that, writes Max Barry.
updated 3:20 PM EST, Fri December 12, 2014
Thomas Maier says the trove of letters the Kennedy family has tried to guard from public view gives insight into the Kennedy legacy and the history of era.
updated 9:56 AM EST, Mon December 15, 2014
Will Congress reform the CIA? It's probably best not to expect much from Washington. This is not the 1970s, and the chances for substantive reform are not good.
updated 4:01 PM EST, Mon December 15, 2014
From superstorms to droughts, not a week goes by without a major disruption somewhere in the U.S. But with the right planning, natural disasters don't have to be devastating.
updated 9:53 AM EST, Mon December 15, 2014
Would you rather be sexy or smart? Carol Costello says she hates this dumb question.
updated 5:53 PM EST, Sun December 14, 2014
A story about Pope Francis allegedly saying animals can go to heaven went viral late last week. The problem is that it wasn't true. Heidi Schlumpf looks at the discussion.
updated 10:50 AM EST, Sun December 14, 2014
Democratic leaders should wake up to the reality that the party's path to electoral power runs through the streets, where part of the party's base has been marching for months, says Errol Louis
updated 4:23 PM EST, Sat December 13, 2014
David Gergen: John Brennan deserves a national salute for his efforts to put the report about the CIA in perspective
updated 9:26 AM EST, Fri December 12, 2014
Anwar Sanders says that in some ways, cops and protesters are on the same side
updated 9:39 AM EST, Thu December 11, 2014
A view by Samir Naji, a Yemeni who was accused of serving in Osama bin Laden's security detail and imprisoned for nearly 13 years without charge in Guantanamo Bay
updated 12:38 PM EST, Sun December 14, 2014
S.E. Cupp asks: How much reality do you really want in your escapist TV fare?
updated 1:28 PM EST, Thu December 11, 2014
Rip Rapson says the city's 'Grand Bargain' saved pensions and a world class art collection by pulling varied stakeholders together, setting civic priorities and thinking outside the box
updated 6:10 PM EST, Sat December 13, 2014
Glenn Schwartz says the airing of the company's embarrassing emails might wake us up to the usefulness of talking in-person instead of electronically
updated 5:33 PM EST, Fri December 12, 2014
The computer glitch that disrupted air traffic over the U.K. on Friday was a nuisance, but not dangerous, says Les Abend
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT