Barbarians at the Store? Private Equity, Products, and Consumers
82 Pages Posted: 6 Feb 2017 Last revised: 22 Jun 2021
Date Written: June 16, 2021
We investigate the effects of private equity firms on product markets using price and sales data for an extensive number of consumer products. Following a private equity deal, target firms increase retail sales of their products 50% more than matched control firms. Price increases---roughly 1% on existing products---do not drive this growth. The launch of new products and geographic expansion do. Competitors reduce their product offerings and marginally raise prices. Cross-sectional results on target firms, PE firms, the economic environment, and product categories suggest that private equity generates growth by easing financial constraints and providing managerial expertise.
Keywords: Private Equity, Product Markets, Pricing Strategy, Consumer Products
JEL Classification: G24, L11
Suggested Citation: Suggested Citation