Abstract
Using a meta-analytical approach, this study reviews the fragmented and contradictory empirical literature on the real effects of private equity (PE) on their portfolio companies, focusing on post-buyout operating performance and employment. Based upon 330 samples including 403,820 firms, we find a positive PE effect on operating performance in the medium-to-long term, but no effect on employment. Interestingly, performance gains are stronger in private-to-private buyouts compared to public-to-private buyouts. Countries with strong investor protection laws or with individualistic cultures facilitate larger operating performance gains, while employees are better off in countries with more stringent employee protection laws or with collectivistic cultures.
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