With shareholders most concerned with IRRs, the wider public has long been talking about the industry’s wider impact on society. Specialist industry adviser Mark Florman talks with Kimberly Romaine about measuring positive externalities
That private equity impacts more than just its shareholders has never been more evident. EVCA's appointment last week of its first LP chairman was testament to the industry's need to engage with a wider stakeholder base.
While the industry is long on performance metrics, it is woefully short on measuring its wider contribution to society, according to Mark Florman, formerly BVCA chairman and now a special adviser to the industry.
"This industry is particularly good at generating [positive externalities] but particularly poor at mentioning it," he says. "Many assume the external impact [of private equity] is neutral, or even negative if we have to cut jobs. In emerging markets, the presumption is that private equity and venture capital will only ever make a positive contribution. A metric to show the contribution to job creation, tax generation, to the environment, to land use, to IP, product development, local supply chains, manufacturing skills... that is your external rate of return (ERR). It can be negative, but I'm pretty certain that it's usually positive."
The unquote" Awards celebrate innovation and excellence in the British private equity industry. Entrants are encouraged to shout about their positive ERRs – particularly in the GP categories, where detailing exits. Last year, every exit on our competitive Shortlist had generated jobs for the businesses they backed – an achievement the judges were incredibly proud of.
Your comment will be moderated before publication.
Move will also see Accent take control of pick and mix company's board
01 Sep 2014 |
More from UK unquote
Updating your subscription status
Tim Ashlin, Synova Capital
Business Growth Fund (BGF) has appointed Sarah Ledwidge as investment manager in its Bristol Office
Downing has appointed Sam Archer as investment director in its unquoted investment team.