A study on the performance of private equity owned companies during booms and busts

Abstract: The benefits of private equity ownership are by many deemed to be substantial. Analysing operating performance of private equity owned companies in the US during economic upturns and downturns for the periods 1997-2002 and 2005-2009, we find conflicting results with regards to their performance relative to peers. EBITDA margin is lower for private equity owned companies during the first period and comparable during the second period. The private equity owned companies are however found to outperform in terms of sales growth during both upturn periods while no significant difference is found during the downturn periods. To conclude, our results indicate that the effects of private equity ownership differs with regards to different time periods and characteristics of portfolio companies.