Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251587 
Year of Publication: 
2022
Series/Report no.: 
IWH Discussion Papers No. 10/2022
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
The effects of private equity buyouts on employment, productivity, and job reallocation vary tremendously with macroeconomic and credit conditions, across private equity groups, and by type of buyout. We reach this conclusion by examining the most extensive database of U.S. buyouts ever compiled, encompassing thousands of buyout targets from 1980 to 2013 and millions of control firms. Employment shrinks 13% over two years after buyouts of publicly listed firms - on average, and relative to control firms - but expands 13% after buyouts of privately held firms. Post-buyout productivity gains at target firms are large on average and much larger yet for deals executed amidst tight credit conditions. A post-buyout tightening of credit conditions or slowing of GDP growth curtails employment growth and intra-firm job reallocation at target firms. We also show that buyout effects differ across the private equity groups that sponsor buyouts, and these differences persist over time at the group level. Rapid upscaling in deal flow at the group level brings lower employment growth at target firms.
Subjects: 
administrative data
business cycle
credit conditions
employment
private equity
productivity
JEL: 
D24
G24
G32
G34
J23
J63
L25
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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