How do private equity transactions affect employment at the acquired companies?
A. Over time, private equity investments often slow or halt existing job losses and under some conditions can drive significant job growth, according to two recently published studies. A 2008 study of 5,000 transactions over 25 years commissioned by the World Economic Forum and led by Harvard Business School Professor Josh Lerner concluded that private equity portfolio companies, prior to PE acquisition, were, on average, losing jobs at existing facilities at a rate one to three percent faster than their competitors. After a private equity investment or acquisition, those same companies initially experienced a dip in employment but by year four under private equity ownership, employment rates rose to slightly above the industry average. The WEF study also concluded that in the first two years of investment, private equity firms increased the rate of job growth at new U.S. facilities built by their portfolio companies to six percent above the peer industry average. Another study, conduc
