The effects private equity owned firms have on the Norwegian society

Abstract

There is a long-standing controversy regarding private equity (PE) and its impact on society. Using unique data from ACPE1, Reuters and Danske Bank, the economic effects of PE on portfolio companies is analyzed in a sample of 239 buyouts and 438 ventures in the period from 1998 to 2011, examining the effect these companies have on different stakeholders. The contribution to stakeholders is measured by five dimensions: Value creation, Financial distress, Employees, Tax and Productivity. At first, enhancements in revenue are observed for portfolio companies, followed by improved productivity, and finally, wage increases coupled with no-less-than benchmark changes in number of employees, indicating that the frequent negative criticism of the impact of PE-activity on employment is groundless and misdirected.