As the British private equity fight rages on, one interesting subplot involves a possible breakup of the British Venture Capital Association. Specifically, the group’s majority (VCs and small/mid-sized buyout firms) are upset that the group’s minority (large/mega buyout firms) is dictating policy. And the former may soon make a clean break from the latter.
What’s interesting from the U.S. perspective, however, is that such a fissure could never happen. Not because everyone gets along so well, but because there is no umbrella group for private equity. Venture capitalists have the National Venture Capital Association, mega-buyout firms recently formed the Private Equity Council, and the vast small/mid-sized buyout community has nothing.
Let me repeat that last part: The most populous part of the U.S. private equity pie has absolutely no organized representation in Washington. Is there is any other industry of its size without a trade group? Just imagine when the carried interest taxation hearings start in Congress (and they will): “Testifying on behalf of the private equity industry’s small and middle-market firms is… no one.”
It’s probably too late to remedy the situation in time for the coming taxation debate, but at least someone is going to try: Kilpatrick Stockton, an Atlanta-based law firm that is in the very early stages of forming an ad hoc group for small/mid-sized private equity firms. Kilpatrick’s private equity law group is spearheading the effort, and plans to leverage its government relations attorneys for Capitol Hill access.
The initial step was the launch of a new blog called CarriedInterestTaxation, which will serve as a portal for relevant information. More formal steps are expected to follow, although Kilpatrick is not yet sure that most prospective members would be willing/able to finance an independent lobbying body like the NVCA or PEC.