Family-owned businesses in France are more open to selling to private equity but the industry still suffers from negative perceptions, according to the new chairman of France’s private equity industry body.
Dominique Gaillard, a 20-year Ardian veteran and investment committee member who was appointed head of France Invest on Thursday, said one of his top priorities was to convince family-owned enterprises of the value-add that private equity can bring.
“Private equity quite often in the past has been put in the same basket as hedge funds, being considered as short-term and only interested in dividends and pressuring the companies they buy,” he told Private Equity International. “These are prejudices and false ideas that I would like to erase. It’s a long and substantial job.”
Fundraising for France-focused private equity vehicles doubled over the last five years, according to France Invest. Last year, they raised €16.5 billion last year, making it the second-largest market in Europe after the UK.
Gaillard, who replaces Eurazeo’s Olivier Millet in the role, said he wanted to introduce a tax-efficient system to distribute up to 10 percent of capital gains among all employees of an acquired company.
“That will help them to understand that we are responsible investors and not here to destroy jobs, reduce capital expenditure or R&D spending,” he said. “We want to convince them that we’re here to help them grow bigger, faster, quicker than what they think.”
Gaillard, who stepped aside from Ardian’s executive committee in January but continues as head of direct funds and an executive director, said he would also focus on lifting the caps French institutional investors – in particular public entities – have on private equity. He added he would push these investors to focus on first-time funds and small firms who may have difficulty raising debut vehicles.
“That’s hundreds of millions of euros that could flow into the private equity market in France,” Gaillard said.