Mergers & Acquisitions asked Gretchen Perkins, a partner with Detroit-based private equity firm Huron Capital, to share her thoughts on how the mid-term elections will affect M&A. Perkins chairs the Association for Corporate Growth’s global public policy committee.
How will Democrats’ winning control of the U.S. House of Representatives affect the financial services industry in general and private equity and M&A in particular?
While having a divided government in terms of party is very common (every president since Carter has served some portion of their terms with the opposing party in charge of Congress), having a divided Congress is less common. Not since the Reagan administration has a President served while each branch of Congress was led by opposing parties. The divided Congress will result in minimal legislative accomplishments for the balance of Trump’s term. It’s possible that there may be bipartisan appetite for an Infrastructure bill, but the funding of such will be an issue, thus imperiling the likelihood of agreement here. Also, the Democratic House will make reconciliation –the process by which the Senate only needs 51 votes to pass legislation instead of the normal 2/3 requirement – impossible without a House to authorize it. Again, all of this unfortunately points to little getting accomplished.
As a dealmaker, which regulatory issues are you paying the most attention to, and how are they likely to be affected by Democrats’ controlling the House?
I think most expect the stimulative effects of the 2018 tax reform to continue to power the economy in 2019, although at possibly a slightly slower pace than we saw this year. The midterm elections results likely will not impact that. On the regulatory side of things – important for the private equity and investment banking industries – we can expect no changes as a result of the midterms. SEC commissioners are elected to 5 year terms that are staggered, so the results of the election do not impact the composition of the SEC. Chairman Clayton’s agenda will continue, which is positive news for the industry.