Private Equity and Human Capital Risk

78 Pages Posted: 5 May 2015 Last revised: 20 Nov 2018

See all articles by Manfred Antoni

Manfred Antoni

Institute for Employment Research (IAB)

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics; Erasmus Research Institute of Management (ERIM)

Date Written: August 7, 2018

Abstract

We study the human-capital effects of private equity buyouts in Germany. We conduct matched-sample difference-in-differences estimations at the establishment and at the individual employee level with more than 152,000 buyout employees and a carefully matched control group. Buyouts are followed by a reduction in overall employment and an increase in employee turnover. Employees of buyout targets experience earnings declines equivalent to 2.8% of median earnings in the fifth year after the buyout. Managers and older employees fare far worse after buyouts compared to the average target employee, even though they are not more likely to lose their jobs at the target compared to other employees. We argue that the employees most negatively affected after buyouts are those who are less likely to find new employment, not those who are most likely to lose their jobs. There is evidence for a reduction in administrative staff and more hiring into jobs that require IT skills.

Keywords: Private Equity, Restructuring, Human Capital Risk, Buyouts, Wages

JEL Classification: G30, G34, J24, J31, M51

Suggested Citation

Antoni, Manfred and Maug, Ernst G. and Obernberger, Stefan, Private Equity and Human Capital Risk (August 7, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 518/2017; Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2602771 or http://dx.doi.org/10.2139/ssrn.2602771

Manfred Antoni

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Ernst G. Maug

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

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

Stefan Obernberger (Contact Author)

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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