Harvard Business School Professor Josh Lerner and the World Economic Forum have recently released the 2009 report on “The Global Economic Impact of Private Equity”.
For research purposes private equity is defined as investments by professionally managed
partnerships that involve leveraged buyouts or other equity investments with a substantial amount of associated indebtedness (as opposed, for instance, to venture capital investments in start-ups).
The key findings of this report are:
1) Private equity-owned firms are generally better managed than counterparts and have strong operational management practices
2) Firms acquired by private equity groups experience productivity growth in the two-year period after the transaction. About 72% of this out-performance differential is attributed to better management than firms of the same age, size and industry.
3) The report explores the globalization of private equity by investigating its impact in France and emerging markets
4) Private equity investors are much more likely to close underperforming establishments at the firms they back, as measured by labour productivity.
5) Productive companies who get acquired by private equity are likely to share productivity gains with workers in the form of higher wages.
Get the full copy of the 2009 Global Economic Impact of Private Equity.