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."
Florman talks with unquote" about measuring PE's positive externalities
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.
Buyout volume and aggregate value were up by 43% and 155%, respectively
Clinical consulting business will look to double its headcount under the GP's tenure
Allard Schuering brings legal experience from Clifford Chance and Baker McKenzie
While many observers criticised the burger chain's role in deporting employees, the controversy raised questions of its private equity owners