Scandinavian Working Papers in Economics

Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)

No 444: Plundered or profitably pumped-up? The effects of private equity takeover

Anders Kärnä () and Samantha Myers
Additional contact information
Anders Kärnä: Financial Stability Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Samantha Myers: Financial Stability Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

Abstract: We study the effects on firms that are acquired by private equity firms in a leveraged buyout, using detailed Swedish registry data covering 1998-2022. Acquired firms see a large increase in their debt and debt related variables, but no significant change in productivity. This suggests that, on average, private equity firms target profitable firms and increase their size through the addition of leverage.

Keywords: Private Equity; LBOs; Firm Performance

JEL-codes: G34; L25

Language: English

15 pages, November 1, 2024

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