Mergers & Acquisitions asked Pam Hendrickson, the chief operating officer and vice chairman, strategic initiatives, of middle-market private equity firm the Riverside Co., to share her thoughts on the election results. Hendrickson is currently a member of the board of the American Investment Council and a member of the advisory board of the Kenan Institute for Ethics at Duke University. In the past, she has testified before Congress on behalf of the private equity industry.
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?
As an industry, we will work to educate the nearly 100 new members of Congress about private equity’s positive impact in their communities and their constituents’ lives. We will be talking with them about jobs, investment, and retirement security. We need to make the personal case to each of the new members as well as top leadership in both the House and the Senate. As an example, the incoming Chair of the Ways and Means committee Richie Neal is from the State of Massachusetts which had a 15.4 percent annualized return from its PE portfolio over 10 years. Michael Trotsky, CIO of Massachusetts, is quoted as saying “Private equity is an important asset class. It provides diversification and has been a leading contributor to our high returns since the mid ‘80’s.”
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?
We will continue to keep an eye on tax reform regulations. Most importantly, the industry needs certainty which hopefully means that expected regulatory relief continues to move forward.
Now that the mid-term elections are over, has your sentiment about dealflow changed? Has it improved, declined, or stayed the same? Why?
Dealflow is mostly a function of economic conditions and so likely not that much will change on the deal flow front as a result of politics. It is worth noting that there were 36 gubernatorial races where Democrats secured a handful of new Governorships. These State elections will be important because after the 2020 census is complete, the victors will have considerable say in the delineation of new congressional districts.