Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 851: The Real Effects of Private Equity Buyouts

Joacim Tåg ()
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Joacim Tåg: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Private equity buyouts have become a common element in the industrial development process. I survey the literature on the real economic effect of buyouts: employment, wages, productivity, and long-run investments. Employment tend to marginally fall after a buyout in most countries studied, with the exception being France. There are clear evidence of productivity gains following a buyout, with part of these being shared with worker through higher wages. The evidence is mixed regarding effects on long-run investments.

Keywords: Employment; Innovation; Leveraged Buyouts; Long-run investments; Private equity buyouts; Productivity; Real effects

JEL-codes: G20; G30; G34; J20; L20

25 pages, September 9, 2010

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