Is there any evidence that PE firms improve businesses while in private ownership?
According to a study by Ernst & Young, businesses owned by private equity in the US significantly outperformed their public company equivalents with regard to average annual growth in enterprise value by as much as three to one. Moreover, employment levels were the same, or higher, at exit versus entry 80 percent of the time. Harvard Business School Professor Josh Lerner and research associate Jerry X. Caso found that between 1980 and 2002, the stock price of the firms PE companies brought back to the public equity market after operating them for more than a year rose faster than both the overall stock index and the share price of firms in the same sector not backed by private equity. Clearly, the PE firms were creating significant value.
