Moving the goal posts

18 January 2008 By Lauren Silva

Private equity lobbyists funded a study that says companies bought by buyout firms between 2002 and 2005 have created jobs faster than US businesses overall. That sounds nice. But the comparisons and the timeframe are questionable. It could be a different story in a downturn.

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The Private Equity Council on January 17 released a study on the effects of large private equity acquisitions on employment levels globally and in the US. The study suggests that US jobs at private equity–owned companies acquired between 2002 and 2005 increased 13.3% by 2007, compared to 5.5 percent for all US businesses.

It analyzed the jobs data from 42 large companies acquired by eight private equity firms in the years 2002 to 2005.

We find that this set of companies purchased by private equity funds, after sometime experiencing initial job losses, generated job gains within two years that exceeded both the initial losses and the rates of job gains by other companies in the same sectors, the study's authors said.

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