“And if you don’t know, now you know.” —Biggie Smalls
What do Biggie Smalls and the middle market community have in common?
Not much, really.
But if Biggie had anything to say about the federal government’s response to privately held businesses, specifically affiliated companies with private equity backing, then his quote would be spot-on.
Pre-COVID 19, there were more than 200,000 privately held companies in the United States, employing about 45 million people. I refer to it as our economy’s “best-kept secret,” which helped seal a fate of exclusionary policies enacted in both the CARES Act and the year-end relief bill.
There should be no secrets about the forms of capital that retain and create jobs, restructure, and sustain businesses, and innovate and grow companies. When a handful of policymakers use the words “private equity” as a weapon to destroy and demonize all forms of private capital, there is an understandable reticence to call b-s. However, keeping a secret and remaining silent made the relief for “all firms” deploying private capital impossible and in truth invisible, evidenced by three rounds of Paycheck Protection Program funding that excluded many companies with private equity backing.
Even before COVID, ACG was beating the drum, “and if you didn’t know, now you know.” We regularly visited Capitol Hill with stories in hand about how much economic growth in Congressional districts across the country was realized because of private capital. Annual trips were like Groundhog Day: Congressional members and staffers alike, hailing from both sides the aisle with constituents in red, blue and purple states, said without fail, “Wow. We didn’t know.”
Sadly, did all those members of Congress and their staffers plead for inclusion for the companies whose districts saw job growth? Nope. Here again, knowledge neither yielded power or influence. Because without a steady stream of voices informing and engaging with state and federal policymakers, blissful ignorance prevailed. Despite the millions of dollars spent by us and others on Capitol Hill, the reality is not much has changed. Sure, we have prevented some onerous legislation (maybe), but there remains a gross misunderstanding of who we are and our impact on the economy.
According to the National Center for the Middle Market (NCMM), the middle market represents 3% of all U.S. companies yet accounts for a third of U.S. private-sector gross domestic product (GDP) and jobs. And while we have yet to realize the long-term impact of COVID in this segment of the economy, our members surveyed throughout this crisis communicated that the inability to access capital – in the form of grants – would most certainly result in job loss. NCMM has queried middle-market executives for the last decade and saw a complete pivot from a positive outlook at the end of 2019 to negative growth in mid-2020.
Last year brought many opportunities for us to communicate and advocate with policymakers. I had plenty of Groundhog Day moments, with Representative Steven Horsford, Senator Pat Toomey and Senator Marco Rubio, as well as others, who echoed “Wow. We didn’t know.”
As we begin 2021, let us bid adieu to best-kept secrets. Let us trumpet our investments and accolades. Let us keep beating the “job creator and retainer” drum, ad nauseam, if necessary. Let us celebrate the ACG members who serve, employ, and lead promising and innovative companies throughout this country, continent and the world. That is a fact, one worth sharing. And at the end of the day, dollars in DC mean little if we don’t use our grassroots platform to tell our story over and over again.
As Biggie said, “And if you don’t know, now you know.”
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