Private Equity Takeovers and Employment in the UK: some Empirical Evidence

Award Winner: 
Winner of the 2012 Standard Life Investments Finance Prize (Best paper in the Finance Working Paper series)

Private Equity Takeovers and Employment in the UK: some Empirical Evidence

Marc Goergen, Noel O'Sullivan, Geoff Wood

Series number :

Serial Number: 
310/2011

Date posted :

June 01 2011

Last revised :

August 07 2011
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Keywords

  • private equity • 
  • acquisitions • 
  • employee relations

This study investigates the employment consequences of private equity acquisitions, in particular institutional buy-outs (IBOs), in the UK. It involves a pre- and post-acquisition analysis of employment and performance characteristics for a sample of acquired firms and a matched sample of non-acquired firms.

The study finds a significant decrease in employment in acquired firms in the year immediately after the completion of the IBO compared to the non-acquired firms. Further analysis fails to identify any parallel or subsequent increase in firm productivity or profitability. This evidence suggests that the observed downsizing has not been effective either in disciplining staff or imparting a clearer focus to activities.

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Authors

Professor
Real name:
Noel O'Sullivan
School of Business and Economics, Loughborough University
Real name:
Geoff Wood