BVCA Chief Executive, Simon Walker looks forward to 2008
As we start the New Year, I want to take this opportunity to set out the BVCA ’s priorities for 2008.
Although the credit crunch and the consequent slowdown in big buy-out activity has reduced the barrage of media and political criticism against private equity in the short term, the threat has not gone away. All the signs are that the industry’s critics both in the UK and internationally will continue to attack us as part of their broader campaign against markets and globalisation. The threat of legislation hangs over us if we cannot show that self-regulation is a much better way forward and given the state of the world economy we have to expect that 2008 could prove a difficult year in a variety of ways for our industry.
We must not make the mistake of believing that all we have to do is keep our heads down and that things will go back to how they were a year ago. Private equity is going to remain in the spotlight. It has become part of the economic mainstream, and we have to act accordingly.
Taking this into account, I see us having three main tasks for 2008:
· to get the message across that private equity and venture capital are a force for good for the British economy
· to show that we can make self-regulation work
· to restructure the BVCA, in order to win respect for the work it does, and to represent the different elements of our membership more effectively.
1. Private equity is a force for good
I see three main strands to our work in communicating more effectively that private equity is a force for good.
(i) The first is for the BVCA itself to become a more effective representative body. Restructuring the organisation (of which more below) is part of this, but on its own will not be enough. I want the BVCA to develop a more campaigning attitude of mind, to strengthen our relationships with politicians and journalists and to build alliances with those who share our belief in markets and competition, and where we have common ground more generally. In all the media and political briefings that we are setting up for the months ahead, I will be emphasising the positive contribution the industry makes all the way from new business start-ups and University spin-outs to the bigger deals, showing that private equity helps make British companies more competitive and productive.
(ii) The second strand, in line with the recommendations of the Walker Report, is for the BVCA to commission much more research so that we have data which is widely seen to be independent and rigorous. This work has already begun - Ernst & Young have, for example, already been commissioned to carry out a research project on the economic impact of large deals.
(iii) The third strand is what firms can themselves do to give the industry a human face. The fact is that every day of the year, companies backed by private equity are growing, taking on more staff, and helping the economy become more productive. They are often part of the high street, involved in their local community or helping create jobs in local and regional economies. The best people to talk about the contribution that private equity and venture capital makes are those who are responsible for that success. Therefore, in the coming year, I hope that individual firms, and perhaps more particularly their portfolio companies, will strengthen their relationships with the media, politicians and the wider world.
2. Making self-regulation work
The second challenge is the need to show that we can make self-regulation work, under the terms of the Walker guidelines. Following Sir David’s report, the BVCA will itself be taking on new responsibilities for monitoring compliance with the new guidelines. As you will know, Sir Mike Rake is the first Chair of the Review Group. I will be announcing shortly the membership of the rest of the group and how it will operate in the coming year.
The response to the Walker Report by the industry has been very encouraging with members being swift to accept its recommendations. This is a good start, but as the BVCA moves from being simply a representative body to taking on a more regulatory role, our task will be to keep the pressure up. A year from now, we need to be able to show to the government and to others that Walker has delivered what we promised. We will not achieve that by allowing the convoy to go at the pace of the slowest.
3. Restructuring the BVCA
My third main task is to restructure the BVCA and make sure that it represents better the whole spectrum of its membership. Many of you took part through interviews, polls and workshops in the strategic review of the BVCA that took place in the second half of last year and your input has been very helpful in shaping our thinking. We recognise the need to provide a sharper focus on the various elements of the BVCA’s membership, from venture, to mid-market, to large buyout. We will be announcing the final details of our reorganisation shortly, but I am confident that it will help give our work more impact in future.
I don’t want to pretend that we can transform the reputation of private equity overnight, but what strikes me coming into this job is that we have a very strong case to make. The BVCA’s members invested in over 1300 UK companies last year, growing them at much faster rates than the public markets, paying £35 billion in taxes to the Exchequer, and boosting pensions for millions. This is a fantastic contribution of which we can all feel proud.
My task is to make sure that 2008 is the year that our contribution to the British economy receives the recognition it deserves.
With best wishes
Simon Walker
Chief Executive
BVCA - The British Private Equity and Venture Capital Association
