The recent financial crisis was a catalyst that drew significant attention to private capital investment. An unfortunate side effect of this intense scrutiny has been the pervasion of inaccurate information in the media and Capitol Hill about private capital and the role it plays in the U.S. economy.
As one of the leading advocates for the middle-market industry, the Association for Corporate Growth (ACG) has set out to change that and foster a new narrative beginning with the announcement of the ACG’s first policy agenda. This agenda details ACG’s official position on relevant policy topics that impact ACG members and the market as a whole. However, ACG understands that it is but one step of many to help lawmakers understand how middle-market investment drives growth, creates jobs and stimulates the economy.
The middle market (1) is the principal engine of the U.S. economy, producing more new jobs than large or small businesses. With 43 million employees, the vitality of the middle market is critical to the health of American families, communities and the overall economy. To continue driving growth, middle-market firms need access to both financial and knowledge capital to successfully reach new markets, expand capacity and better serve their customers. In addition, middle-market firms need public policies that reward prudent risk-taking, support and encourage capital formation, enhance access to capital and expand access to the global marketplace.
ACG Middle-Market Growth Policy Agenda
Driving Middle-Market Growth® is the mission of ACG. To that end, ACG encourages the growth and development of middle-market companies by supporting policies that foster and incentivize private capital formation and investment. ACG members provide financial and intellectual capital and services that sustain and accelerate the growth of middle-market firms. In support of the ACG mission, ACG members and the economy, ACG will focus on the following policy priorities:
Comprehensive Business Tax Reform
ACG will aggressively represent the voice of the middle market in the process of comprehensive business tax reform, with a focus on the areas which directly impact capital investment and formation.
Deductibility of Interest on Corporate Debt
ACG believes that debt financing is critical to business expansion, acquisitions, investment, inventory and cash flow management, as well as providing an important source of needed funding. ACG opposes efforts to eliminate the long-standing deductibility of interest as a normal cost of doing business.
Dodd-Frank
The Dodd-Frank financial reform law mandates 447 new rules, only one third of which have been finalized. ACG will seek to replace or eliminate areas of Dodd-Frank that do not achieve their intended goals and assist and monitor rule-making to ensure clarity and fairness to middle-market investors.
Clarify JOBS Act Regulations
ACG believes that clarity around certain parts of the JOBS Act is vitally important for ACG members. ACG will focus on Rule 506 (solicitation of accredited investors) to ensure clarity and fairness for middle-market investors.
To download a full copy of the agenda, click here, or visit www.acg.org for more information.
Driving Growth: The Impact of Private Capital on the U.S. Economy
ACG’s policy efforts are not solely contained in the policy agenda, but also in two other initiatives undertaken to help create some synergy around these endeavors – “Driving Growth” and GrowthEconomy.org. ACG’s recently released “Driving Growth: The Impact of Private Capital on the U.S. Economy” is a comprehensive report which graphically depicts data from GrowthEconomy.org for each congressional district. The book compares sales and job growth data of private capital-backed companies in comparison to all other U.S. businesses between 1995 and 2010, organized by state and by congressional district, and the results are striking.
First off, private equity and venture capital investments have been made in more than 425 congressional districts and in every U.S. state, the District of Columbia, Puerto Rico and the Virgin Islands. Secondly and most significantly, this report reveals that companies backed by private capital outperform other companies by a wide margin in revenue growth and job growth. ACG printed and distributed “Driving Growth” to all members of Congress, all U.S. governors and select media and academics.
This book is a collaboration between ACG, the Edward Lowe Foundation, The Institute for Exceptional Growth Companies and PitchBook Data, Inc. The source of data, GrowthEconomy.org, utilized three independent databases to present these never-before-seen data results. GrowthEconomy.org allows users to compare the performance of 23,211 private capital-backed companies to the universe of 52 million U.S. business establishments from 1995 to 2010. Customizable search results include both sales and employment growth and are available online at www.GrowthEconomy.org.
Combined, these two major reports are the driving force behind many of ACG’s initiatives. They drive ACG’s communications on Capitol Hill and they drive the impact that ACG is having as the voice of the middle market. There is still much to be done, but with focus and data, ACG is positioned to positively impact policy that will help businesses grow and, more importantly, help the U.S. economy thrive.
For more information on both of these initiatives, please visit www.ACG.org. If you would like to speak with ACG directly, please contact me at cjmorton@venable.com, or Christine Melendes, vice president, communications and marketing for ACG, at cmelendes@acg.org.
(1) The National Center for the Middle Market at Ohio State University defines the middle market as including companies that have $25 million to $1 billion in revenues.
About The Association for Corporate Growth
Founded in 1954, ACG is a global organization with 58 chapters and more than 14,500 members. ACG’s members are the investors, owners, executives, lenders and advisors to the leading emerging growth companies in the middle market. Learn more at www.acg.org. ACG drives middle-market growth.