Bloomberg today reports that buyout firms are forming a lobbying group to fend off increased regulation. Kind of like an LBO version of the National Venture Capital Association.
If this sounds kinda familiar, don’t be afraid. You probably just read about it back in July, when I wrote that it was being formed by Carlyle Group, Blackstone Group, KKR and Texas Pacific Group. More recently, Buyouts Magazine reported that the group is being called the Private Equity Council, and that its top representative will be veteran lobbyist and investment banker Harry Clark. What follows is an excerpt from that article, dated October 17:
They’ve been busy beavers behind closed doors,” says a spokesman for a firm that has been active in putting the Private Equity Council together. He added that the effort would likely not officially launch until early next year.
“There are trade organizations for the decorative goldfish growers and the egg producers and every business you can think of large and small,” says Michael Harrell, a partner at Debevoise & Plimpton who is co-chair of the firm’s Private Equity Funds Group. “And yet you have a large industry that doesn’t have a voice.”
The National Venture Capital Association (NVCA) does lobby on behalf of buyout firms and counts several among its membership. However, as its name suggests, the association more specifically addresses the needs of the venture capital market, which developed years before the mega-buyout fund businesses of today.
“The NVCA has done a very good job with education and a good job of lobbying,” says Clint Harris, managing general partner with Grove Street Advisors. “It’s sort of an accident of the [private equity] industry. The venture industry came about first and the buyout firms were islands to themselves,” says Harris. “Today the industry is sort of one big block and the NVCA represents one half but not the other half.”
Harrell says that part of the reason an industry advocacy group more geared towards buyout firms has been slow to come into being is because they are extremely competitive and often have very different investment philosophies. “Not withstanding what the DOJ investigation suggests, this is a fiercely competitive business,” he says. “So perhaps there was some reluctance for people to band together and adopt a common point of view. Maybe they didn’t have a common point of view.”