The Real Effects of Private Equity Buyouts

Abstract

Private equity buyouts have become a common element in the industrial development process. I survey the literature on the real economic effect of buyouts: employment, wages, productivity, and long-run investments. Employment tend to marginally fall after a buyout in most countries studied, with the exception being France. There are clear evidence of productivity gains following a buyout, with part of these being shared with worker through higher wages. The evidence is mixed regarding effects on long-run investments.

Keywords: Employment, Innovation, Leveraged Buyouts, Long-run investments, Private equity buyouts, Productivity, Real effects

JEL Classification: G20, G30, G34, J2, L2