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Winning Over Washington

ACG Global went to the nation's capital for the second annual Middle-Market Growth Policy Summit to promote private capital

The Association for Corporate Growth (ACG) continues its mission of addressing public policy. The most recent endeavor, in March, saw members gather in Washington, D.C. for the second year to attend the Middle Market Growth Policy Summit.

Even though bad weather made for a much more intimate group, with less than 100 organization members in attendance, the message was loud and clear: policymakers and the public need to be educated about private capital, says ACG chairman Charles Morton.

Guests were presented with supporting data meant to dispel some of the misperceptions people outside of the M&A world have about private equity, Morton adds.

With elected officials weighing in on issues regarding private equity and its relationship with Capitol Hill, including revenue via tax reform, the event served as a platform for ACG to grandstand with the hope of changing perceptions. For example, the ACG released a book at the event titled "Driving Growth: The Impact of Private Capital on the U.S. Economy," which also details sales and job growth of private-backed companies versus other companies in the U.S. by state and congressional district.

Morton spoke to Mergers & Acquisitions about the summit and plans to get lawmakers on ACG's side of the negotiation table.

What public policy issues pertaining to the middle market does the Growth Policy Summit address?

We're in the middle of a broad discussion over tax reform and how it affects very large businesses and special interest groups. Our fear is that the middle market is overlooked. We intend to participate in a discussion that will include taxing S corporations the way C corporations are taxed, which would create a second level of tax and hurt a lot of middle-market businesses. Then there's the capital gains tax rates increasing, taxing income made from offshore investments. With all of these discussions, middle-market businesses have a lot of invested interest in the outcome. Limiting or completely removing the deductibility of interest on corporate debt, for example, would dramatically limit the ability of companies to fund expansion. If you're conducting business overseas, in the current environment, you would be taxed just overseas. But there have been talks that U.S. companies with overseas investments should also be subject to taxation in the U.S.

How has private capital investment helped the economic performance of companies?

We have been able to slice and dice the growth economy around Congressional districts by conducting analysis of the ways private capital funds business and drives the American economy. So for example, based on the most current data, one out of 20 jobs in America is provided by private capital-backed businesses, impacting millions of families across the country in almost every Congressional district. GrowthEconomy.org updates and refines the data so we get more confident about our conclusion that private-capital-backed businesses grow jobs at roughly 3.5 times the rate of non-private-capital business. From 1995 to 2010, private-capital-backed companies grew jobs 64.4 percent, while other companies in the U.S. economy grew jobs by 18.3 percent.

What do you hope to convey to policy makers?

This event reflects part of a multi-year strategic effort by ACG to be the voice of the middle market and change the public debate about the role and importance of private equity. It's going to take a long time, and effort on a lot of different fronts, but we've made enormous strides in the past year. For example, we started to do advocacy work on Capitol Hill, finalized our first policy agenda, which we will also unveil on March 7, and we've been very successful at getting media coverage.

Why is it so crucial to involve policy makers, such as speaker David Schweikert (R-Ariz.)?