Private Equity as an Enabler of Employment Growth: Evidence From European Buyouts
Abstract: With a unique dataset of 337 buyouts observed during 2012 to 2015 across several European countries, this study aims to answer whether leveraged buyouts enable or stifle employment growth for targets relative to non-private equity owned controls. Through a series of regressions we are able to conclude that private equity ownership is associated with more growth in employment and other operating metrics. As an additional test, we investigate if the alleviation of credit constraints following a buyout spurs growth in employment and other operating metrics, where we fail to find a significant effect. Lastly, since most prior literature focuses on one particular country or region, it is difficult to infer results across different geographies. Given our pan-European dataset, we are therefore for the first time able to make direct geographical comparisons and study potential differences across countries. For example, we test whether post-buyout employment varies with labour regulation but do not find any such connection.
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