Private Equity Takeovers and Employment in the UK: Some Empirical Evidence

53 Pages Posted: 7 Aug 2011

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Noel O'Sullivan

Loughborough University - School of Business and Economics

Geoffrey Wood

University of Sheffield - School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: August 7, 2011

Abstract

This study investigates the employment consequences of private equity acquisitions, in particular institutional buy-outs (IBOs), in the UK. It involves a pre- and post-acquisition analysis of employment and performance characteristics for a sample of acquired firms and a matched sample of non-acquired firms. The study finds a significant decrease in employment in acquired firms in the year immediately after the completion of the IBO compared to the non-acquired firms. Further analysis fails to identify any parallel or subsequent increase in firm productivity or profitability. This evidence suggests that the observed downsizing has not been effective either in disciplining staff or imparting a clearer focus to activities.

Keywords: Private equity, acquisitions, employee relations

JEL Classification: G3, G34, J5

Suggested Citation

Goergen, Marc and O'Sullivan, Noel and Wood, Geoffrey, Private Equity Takeovers and Employment in the UK: Some Empirical Evidence (August 7, 2011). ECGI - Finance Working Paper No. 310/2011. Available at SSRN: https://ssrn.com/abstract=1906308 or http://dx.doi.org/10.2139/ssrn.1906308

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Noel O'Sullivan

Loughborough University - School of Business and Economics ( email )

Ashby Road
Loughborough
Leicestershire LE11, LE11 3TU
Great Britain
44 1509 223114 (Phone)

Geoffrey Wood

University of Sheffield - School of Management ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom
0114 22 23346 (Phone)

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