Private equity funds take control of underperforming companies and restructuring and reforming the operations, and invest capital into healthy businesses for greater expansion. So, in theory, private equity helps create jobs. A recent study tested how private equity effects jobs. The study followed 42 large companies acquired by 8 major private equity firms from 2002-2005 and found that after initial job losses, the companies were able to exceed the initial job losses and relative rates of job gains their competitors within two years of the takeover. The results suggest that private equity acquisitions create more jobs:
- The combined worldwide workforce of the 42 firms grew 8.4%.
- U.S. domestic jobs in private equity-backed firms increased 13.3%, much higher than the 5.5% increase for all U.S. businesses.
- Non-manufacturing companies backed by private equity expanded total employment by 8.4%
- Private equity-backed manufacturing firms had the highest gains with a worldwide employment increase of 8.6%
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Link to This Resource: Private Equity Impact on Jobs
http://privateequityblogger.com/2008/06/private-equity-impact-on-jobs.html
