The private equity industry has been looked upon unfavorable in Washington, in the media and in the public eye for a number of years. This situation came to a head during Mitt Romney’s candidacy for the Republican nomination for president in 2008 and galvanized the industry into action.
Now, an industry trade organization called the Association for Corporate Growth is launching an image-building and education campaign on Capitol Hill to promote the middle market business sector and the private equity industry that fuels its growth. Three members of ACG spoke at the 2015 Global Private Equity conference on October 9 about their public-policy strategy and what they hope to accomplish. The event was sponsored by the Zell Lurie Institute and the Center for Venture Capital and Private Equity Finance at Michigan Ross.
“We are trying to tell the story that didn’t get told,” said Gretchen Perkins, a partner at Detroit-based private equity firm, Huron Capital Partners. “In Washington, we need to draw a full picture of the circle of life of the cash. Pension funds invest in us [private equity] to manage their money, to buy companies, to grow them and to sell them at a very strong profit. A significant amount of those profits go back to the pension funds, thus funding retirements and providing a safe and secure retirement for pensioners. That story is not talked about enough, if at all.”
ACG has defined three primary pillars of its public-policy strategy: legislative, regulatory and grassroots. “It comes down to education and advocacy,” explained Jason Byrd, managing director of Charter Capital Partners. “We are trying to build support for our industry and persuade people that private equity works for the public good.” ACG’s strategic efforts include building a caucus to lobby legislators and their staff, launching a media communication campaign and hosting a public-policy summit. The trade association also created a Private Equity Regulatory Task Force to meet with legislators and regulators in Washington and to develop best practices for the middle market private equity industry.
Addressing current or proposed legislative policies that place excessive restrictions on middle market business and private equity investors is vitally important, said Pam Hendrickson, chief operating officer of the Riverside Company, a Cleveland-based global private equity firm. She outlined ACG’s key legislative objectives:
- Preserve the interest deductibility of corporate debt.
- Reduce onerous compliance and regulatory burdens for middle market PE.
- Preserve the current “joint employer” legal status for middle market business.
- Maintain capital gains treatment for carried interest.
“Everyone loves small businesses,” Byrd concluded. “Big businesses certainly can take care of themselves on Capitol Hill, and they do through their own advocacy. But companies in the middle market don’t have a voice. Our focus is to provide them with a voice to all different governmental entities.”