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.
Backers close a $18.6m round started in 2015 with an initial $10.6m capital injection
GP invests via its Nordic Capital Fund IX, which held a final close on €4.3bn in May 2018
Abalos Therapeutics is a biotechnology company focused on developing immuno-oncology therapeutics
Existing management team will lead the company's future growth and development