Wirtschaft im Wandel
Wirtschaft im Wandel Die Zeitschrift „Wirtschaft im Wandel“ will eine breite Öffentlichkeit erreichen. Sie stellt wirtschaftspolitisch relevante Forschungsergebnisse des IWH vor…
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Management-Buy-Outs
Management-Buy-Outs in Ostdeutschland Die Studie über Management-Buy-Outs (MBOs) untersucht einen wichtigen Teil des ostdeutschen Unternehmensbestands: Unternehmen, die im Zuge…
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The (Heterogenous) Economic Effects of Private Equity Buyouts
Steven J. Davis, John Haltiwanger, Kyle Handley, Josh Lerner, Ben Lipsius, Javier Miranda
IWH Discussion Papers,
Nr. 10,
2022
Abstract
The effects of private equity buyouts on employment, productivity, and job reallocation vary tremendously with macroeconomic and credit conditions, across private equity groups, and by type of buyout. We reach this conclusion by examining the most extensive database of U.S. buyouts ever compiled, encompassing thousands of buyout targets from 1980 to 2013 and millions of control firms. Employment shrinks 13% over two years after buyouts of publicly listed firms – on average, and relative to control firms – but expands 13% after buyouts of privately held firms. Post-buyout productivity gains at target firms are large on average and much larger yet for deals executed amidst tight credit conditions. A post-buyout tightening of credit conditions or slowing of GDP growth curtails employment growth and intra-firm job reallocation at target firms. We also show that buyout effects differ across the private equity groups that sponsor buyouts, and these differences persist over time at the group level. Rapid upscaling in deal flow at the group level brings lower employment growth at target firms.
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Private Equity in the Hospital Industry
Janet Gao, Yongseok Kim, Merih Sevilir
ECGI Working Paper,
Nr. 787,
2021
Abstract
We examine employment and patient outcomes at hospitals acquired by private equity (PE) firms and PE-backed hospitals. While employment declines at PE-acquired hospitals, core medical workers (physicians, nurses, and pharmacists) increase significantly. The proportion of wages paid to core workers increases at PE-acquired hospitals whereas the proportion paid to administrative employees declines. These results are most pronounced for deals where the acquirers are publicly traded PE-backed hospitals. Non-PE-backed acquirers also cut employment but do not increase core workers or reduce administrative expenditures. Finally, PE-backed acquirers are not associated with worse patient satisfaction or mortality rates compared to their non-PE-backed counterparts.
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Private Equity and Portfolio Companies: Lessons From the Global Financial Crisis
Shai B. Bernstein, Josh Lerner, Filippo Mezzanotti
Journal of Applied Corporate Finance,
Nr. 3,
2020
Abstract
Critics of private equity have warned that the high leverage often used in PE-backed companies could contribute to the fragility of the financial system during economic crises. The proliferation of poorly structured transactions during booms could increase the vulnerability of the economy to downturns. The alternative hypothesis is that PE, with its operating capabilities, expertise in financial restructuring, and massive capital raised but not invested ("dry powder"), could increase the resilience of PE-backed companies. In their study of PE-backed buyouts in the U.K. - which requires and thereby makes accessible more information about private companies than, say, in the U.S. - the authors report finding that, during the 2008 global financial crisis, PE-backed companies decreased their overall investments significantly less than comparable, non-PE firms. Moreover, such PE-backed firms also experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects were especially notable among smaller, riskier PE-backed firms with less access to capital, and also for those firms backed by PE firms with more dry powder at the crisis onset. In a survey of the partners and staff of some 750 PE firms, the authors also present compelling evidence that PEs firms play active financial and operating roles in preserving or restoring the profitability and value of their portfolio companies.
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Private Equity and Financial Fragility During the Crisis
Shai B. Bernstein, Josh Lerner, Filippo Mezzanotti
Review of Financial Studies,
Nr. 4,
2019
Abstract
Does private equity (PE) contribute to financial fragility during economic crises? The proliferation of poorly structured transactions during booms may increase the vulnerability of the economy to downturns. During the 2008 crisis, PE-backed companies decreased investments less than did their peers and experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects are especially strong among financially constrained companies and those whose PE investors had more resources at the crisis onset. In a survey, PE firms report being active investors during the crisis and spending more time working with their portfolio companies.
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Private Equity and Industry Performance
Shai B. Bernstein, Josh Lerner, Morten Sorensen, Per Strömberg
Management Science,
Nr. 4,
2017
Abstract
The growth of the private equity industry has spurred concerns about its impact on the economy. This analysis looks across nations and industries to assess the impact of private equity on industry performance. We find that industries where private equity funds invest grow more quickly in terms of total production and employment and appear less exposed to aggregate shocks. Our robustness tests provide some evidence that is consistent with our effects being driven by our preferred channel.
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The Operational Consequences of Private Equity Buyouts: Evidence From the Restaurant Industry
Shai B. Bernstein, Albert Sheen
Review of Financial Studies,
Nr. 9,
2016
Abstract
How do private equity firms affect their portfolio companies? We document operational changes in restaurant chain buyouts using comprehensive health inspection records. Store-level operational practices improve after private equity buyout, as restaurants become cleaner, safer, and better maintained. Supporting a causal interpretation, this effect is stronger in chain-owned stores than in franchised locations—“twin” restaurants over which private equity owners have limited control. These changes are particularly apparent when private equity partners have prior industry experience. The results suggest that by bringing in industry expertise, private equity firms improve firm operations.
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Private Equity, Jobs, and Productivity
Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, Javier Miranda
American Economic Review,
Nr. 12,
2014
Abstract
Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers US buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry, size, age, and prior growth. Buyouts lead to modest net job losses but large increases in gross job creation and destruction. Buyouts also bring TFP gains at target firms, mainly through accelerated exit of less productive establishments and greater entry of highly productive ones.
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Die volkswirtschaftliche Bedeutung von Private Equity
Ulrich Blum
Private Equity. Beurteilungs- und Bewertungsverfahren von Kapitalbeteiligungsgesellschaften,
2008
Abstract
Der vorliegende Beitrag untersucht, weshalb private equity als eine spezifische institutionelle Form des Ausreichens von Eigenkapital die Bedeutung erlangt hat, die es aktuell genießt. Er zeigt, dass die Rolle des Eigenkapitals zunächst aus der Systematik der Ökonomie im Rahmen der Innovationstheorie, der Transaktionskostentheorie und der Risikotheorie erklärt werden kann: Private Equity ist eine spezifische Form der Ausgestaltung der Eigenkapitalversorgung, um für Unternehmen in risikobehafteten Märkten die Transaktionskosten effizient zu senken. Darüber hinaus spielt es für die Glaubhaftigkeit des Marktauftritts von Anbietern eine Rolle. Durch spezifische Unvollkommenheiten der Märkte und vor allem auch durch steuerliche Ausgestaltungen, die unter heutigen Bedingungen als nicht effizient angesehen werden dürften, hat sich die wirtschaftliche Bedeutung der Private Equity-Eigenkapitalausreichung beachtlich vergrößert. Damit wächst auch die Notwendigkeit, Unternehmen im Sinne einer wertorientierten Steuerung zu bewerten. Seit dem Sommer 2007 hat sich der „Hype“ abgeflacht, weshalb in einer abschließenden Würdigung die Zukunftsaussichten von Private Equity betrachtet werden.
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