The (Heterogenous) Economic Effects of Private Equity Buyouts

Abstract

are the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed (DRB-B0109-CDAR-2018718, DRB-B0110-CDAR-2018-0718, DRB-B0020-CED-20181128, DRB-B0018-CED-20181126, CBDRB-FY19-CMS-8034, and CBDRB-FY21-CED006-0017). Lerner has advised institutional investors in private equity funds, private equity groups, and governments designing policies relevant to private equity. Davis has served as an expert witness in a legal dispute between private equity firms. All errors and omissions are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.At least one co-author has disclosed additional relationships of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w26371.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

The Effects of Public and Private Equity Markets on Firm Behavior

“…However, gross job creation and destruction increases, which leads to a significant increase in productivity. At the same time, Davis et al (2019) highlight heterogeneity across deal types. Public-to-private deals lead to significant employment declines, in contrast to the employment expansion observed in private-to-private deals.…”

“…These characteristics suggest that productivity gains from private equity and venture capital may be countercyclical. Moreover, the financial structures around these deals could lead to entirely different incentive structures (see, e.g., Davis et al 2019).…”

The New Role of Private Investment in Health Care Delivery

“…In other industries, this disruption has on occasion been beneficial. Firms that were losing money prior to private equity acquisition have become more efficient after . Those that have been unable to compete go under.…”