What are the Wage and Employment Consequences of Leveraged Buyouts, Private Equity and Acquisitions in the UK?

Abstract:     
This paper provides the first comparative examination of the consequences of leveraged buyouts (LBOs) and traditional corporate acquisitions on employment and wages using a uniquely constructed panel data set covering the period 1996-2006. Employing propensity score matching combined with difference-in-differences analysis, the key findings are: (1) related and unrelated acquisitions have employment consequences of a similar magnitude, (2) related and unrelated acquisitions have the largest negative impact on employment followed by non-private equity backed LBOs, (3) acquisitions in the same industry cause an increase in wages, and (4) private equity backed LBOs have no significant impact on either employment or wages.

Number of Pages in PDF File: 25

Keywords: Mergers, Acquisitions, Leveraged Buyouts, Private equity, Employment, Wages

JEL Classification: G34, J23, J31, L23

working papers series