Abstract
ABSTRACTWe provide an overview of the systematic evidence relating to the impact of private equity (PE) backed buyouts over the last two decades. We focus on performance; employment and employee relations; innovation, investment and entrepreneurship; longevity and survival. We also explore a future research agenda in the context of a maturing PE industry.
Highlights
Private Equity (PE) firms acquire a portfolio of firms via a Leveraged Buyout (LBO)
Citations to PE journal articles rose to just below 5,000 by 2006, increasing sharply in 2007 and 2008 around the time the market peaked, with subsequent steady growth to top 10,000 in 2012 (Cumming and Johan, 2017). This could be driven by a curiosity to understand more about PE activity and by the fact that the impact of PE-backed LBOs continues to be contentious with respect to: performance gains; employment and employee relations; longer term effects on innovation and investment; and the longevity and survival of portfolio firms
A recent EU MIFID 2 initiative (BVCA 2017) applicable to PE firms operating in Europe seeks to enhance investor protection, though the consequences of this for Limited Partners (LPs), and their relationship with General Partner (GP), are yet to be observed and studied
Summary
Private Equity (PE) firms acquire a portfolio of firms via a Leveraged Buyout (LBO). Mature businesses (either listed or private/family-owned) and divisions/subsidiaries of large firms are targeted for such deals. This could be driven by a curiosity to understand more about PE activity and by the fact that the impact of PE-backed LBOs continues to be contentious with respect to: performance gains; employment and employee relations; longer term effects on innovation and investment; and the longevity and survival of portfolio firms.
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