Barbarians at the Gate? Leveraged Buyouts, Private Equity and Jobs

31 Pages Posted: 30 Nov 2007  

Kevin Amess

Nottingham University Business School

Mike Wright

Nottingham University Business School

Date Written: September 10, 2007

Abstract

Unions, private equity practitioners and policy-makers are all concerned with the effect that private equity finance and LBOs (Leveraged Buyouts) have on employment. Unions are concerned with job destruction whilst practitioners argue they create jobs. Using a panel of 533 LBOs observed over the 1993-2004 period we find evidence that both private equity financed and non-private equity financed LBOs have higher levels of employment pre- and post-buyout when LBOs are exogenously determined, but they do not have significantly different levels of employment compared with non-LBOs when allowing for LBO endogeneity. The results: (1) demonstrate the importance of allowing for LBO endogeneity; (2) are not consistent with LBOs and private equity either creating or destroying jobs.

Keywords: Leveraged Buyout, private equity, labour demand

JEL Classification: G34, J23, L23

Suggested Citation

Amess, Kevin and Wright, Mike, Barbarians at the Gate? Leveraged Buyouts, Private Equity and Jobs (September 10, 2007). Available at SSRN: https://ssrn.com/abstract=1034178 or http://dx.doi.org/10.2139/ssrn.1034178

Kevin Amess (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/business/lizka1.html

Mike Wright

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5257 (Phone)
+44 115 951 5204 (Fax)

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