Productivity growth at private equity portfolio companies is 13.5 percentage points higher than for comparable business not owned by private equity partnerships, according to a study by
Productivity growth at private equity portfolio companies is 13.5 percentage points higher than for comparable business not owned by private equity partnerships, according to a study by a World Economic Forum research team.
The study found that private-equity owned companies scored the highest in a scientific survey of management practices involving 4,000 manufacturing companies around the world, with particular emphasis on operational expertise.
The study also found that private equity-owned companies increase their productivity in the two years after acquisition at a rate significantly higher than their peers. It found that productivity gains are shared with workers in the form of higher wages.
The team was led by Josh Lerner, a professor of investment banking at Harvard Business School, and Anuradha Gurung, associate director of World Economic Forum USA.
‘The study released by the World Economic Forum represents an important contribution to the body of research on private equity,’ says Douglas Lowenstein, president of the Private Equity Council. ‘Professor Lerner and Dr Gurung, their research team and the WEF are to be congratulated on this groundbreaking work.
‘The study offers compelling new insights into the way that private equity investments strengthen companies and deliver benefits to the people who work for those companies – along with the overall economy. It strongly supports the proposition that private equity investments play a crucial role in driving economic growth, particularly in challenging economic times.’
