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The first installment of our new predictive index shows that dealmakers expect overall M&A to increase, with health care outperforming the overall market READ MORE 

SLIDESHOW

ACG New York Women of Leadership - Entrepreneur Series
Barbara Bradley Baekgaard, founder of Vera Bradley (Nasdaq: VRA), is the latest in a series of entrepreneurs highlighted at ACG New York Women of Leadership events. Photo credit: Robert Blumenfeld

Watercooler

GTCR, Hormel, the Riverside Co-CEOs and Others Win M&A Mid-Market Awards
Amid a slow and challenging year for dealmaking, the winners of Mergers & Acquisitions’ 7th Annual M&A Mid-Market Awards outpaced the competition to grow, innovate and lead the middle market

Roundtable

Financial Services Companies Heat Up M&A Market
Speakers from Flexpoint Ford, Genstar Capital, Baird Capital, Madison Capital Funding and Katten Muchin Rosenman discuss the various factors playing a role in M&A activity within the financial services space

Expert's Corner

Pursuing Pharma Manufacturing
The fragmented pharmaceutical manufacturing industry provides plenty of opportunities for private equity investors, says JLL Partners founder Paul Levy

President Obama’s Reelection Means More Gridlock, Higher Taxes on Carried Interest, Says ACG Chair

The ACG will continue campaign to educate policymakers and public on the middle market and private equity, says Charles Morton in an interview

President Barack Obama’s reelection on Nov. 6 will likely “lead to further gridlock in Washington,” says Charles Morton, the chairman for the Association for Corporate Growth (ACG).

The decision also puts to bed any hopes people may have had about broad changes to healthcare or sweeping changes they thought former Governor Mitt Romney (R - Mass.) might have been able to push through, Morton says.

The ACG plans to continue its relationship with policymakers in Washington, D.C., which has become an increased focus of the organization over the last few years.

“We’re eager to get the message out that it’s the middle market that leads to job growth and opportunity, and that in particular, that private equity matters,” says Morton, adding that private equity creates returns for ordinary Americans.

In February, the ACG held a Middle Market Growth Policy Summit in Washington D.C., which it will hold again in 2013, says Morton. The summit is the ACG’s effort to continue to educate policy makers about the middle market and continues to be of central importance after the election, Morton says.

The ACG launched a public relations campaign this fall, featuring a series of ads, titled "I am private capital," which represents individuals affected by private investors and is based on an amalgam of anecdotal stories.

“There’s a great deal of misunderstanding in Washington about how our slice of the economy works,” Morton says.

Romney's campaign brought focus onto several misperceptions people have about private equity, Morton says, which gives that ACG an opportunity to educate the American people about the true role of private equity.

“If we fail to take advantage of that opportunity, we can only blame ourselves,” says Morton.

Those misperceptions include the idea that private equity creates returns through pillaging businesses, that the only people who make money through private equity are the people running the funds, and that a business can grow without change, Morton says, ideas that he says are “fundamentally flawed.”

The people who really benefit from private equity are the people, such as the investors, firefighters and teachers in California that can retire because the California Public Employees Retirement System enhances its return through private equity.

“That’s an incredibly important part of the story,” Morton says.

President Obama’s reelection also makes the increased taxation of carried interest more likely, according to Morton, which is one of the issues the ACG will focus on.

The people who make carried interest also make other money, and are almost always in the one percent, Morton says. The issue often gets mixed into class warfare politics. From the perspective of someone who believes the interest should continue to be taxed at the capital gains rate, the value of that interest is completely at risk and shouldn’t be treated as a cash investment, Morton says.

Company founders are selling to private equity companies, which creates liquidity for the founders so they can do things like send their grandchildren to college. The private equity firm will be able to take the businesses to the next level, Morton says.

“That’s the American dream,” says Morton.

 For more on ACG initiatives, see editor-in-chief Mary Kathleen Flynn's video conversation with Morton.

 

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