Private Equity: The Secret Sauce for Pandemic-Proof Performance or Just Another Quarantine Regret? How PE-backed companies performed during COVID-19 pandemic compared to non-PE-backed companies

Abstract: This study utilizes a dataset comprising 99 private equity-backed firms and 317 non-private equity-backed firms in Sweden to investigate whether private equity-backed firms were more resilient during the COVID-19 pandemic compared to similar firms using difference-in-differences method. Our findings indicate that private equity-backed firms experienced a significant increase in investment, credit, and equity inflows, and exhibited better operational performance when compared to similar firms in the wake of the COVID-19 outbreak. Additionally, our analysis yields mixed results regarding the effect that private equity has on financially constrained firms. Most of the results are consistent with previous studies conducted during the 2008 financial crisis, which suggest that private equity-backed firms are better equipped to navigate financial instability during times of crisis.