Private Equity: A Review and Synthesis: Geoffrey Wood and Mike Wright

International Journal of Management Reviews (2009)
doi: 10.1111/j.1468-2370.2009.00264.x
Private equity: A review

and synthesis ijmr_264 361..380
Geoffrey Wood1 and Mike Wright

The recent international surge in private equity markets has been accompanied by growing
interest in its nature and effects. Private equity involves investment in unquoted companies
and includes both early stage venture capital and later stage buyouts. The latter, which have
been particularly controversial, are our focus. This paper provides a review of the different
theoretical approaches that have been deployed to understand this phenomenon. Thereaf-
ter, the findings of a large cross section of empirical studies within a range of different
national settings are compared and contrasted. Finally, existing themes emerging from – and
gaps in – the existing literature and likely future directions are summarized.
management which include detailed reporting

Introduction
requirements. Lenders also typically specify
The recent international surge in private equity and closely monitor detailed loan covenants
markets has been accompanied by growing (Citron et al. 2006). In a traditional US-style
interest in both the academic and practitioner leveraged buyout (LBO), typically a publicly
literature in the nature and effects of private quoted corporation or a large division of a
equity activity. Broadly defined, private equity group is acquired by a LBO association. As
involves investment in unquoted companies the industry has developed, LBO Associations
and includes both early stage venture capital have metamorphosed into private equity
and later stage buyouts.2 While early stage firms.
venture capital investments have raised major Buyouts have variously been presented as
issues concerning the stimulation of policies to driving more efficient use of organizational
address financing gaps, their economic and resources, or thinly concealed asset stripping,
social impact are generally seen as benign with deleterious consequences for employees
(Lockett et al. 2002). Recent debate has con- and other stakeholders. The latter perspective
cerned the buyout segment of the market has given rise to extensive pressures for
(Financial Services Authority 2006; PSE- tighter regulation of the private equity indus-
Group in European Parliament 2007), which try. The debate has generally been marked by
are our focus here. Buyouts involve radical the trading of anecdotal examples of negative
changes in the corporate governance of firms. and positive effects by the different sides,
Private equity firms backed by substantial bor- without an appeal to the scientific evidence.
rowings acquire a significant if not majority Yet, a review of existing work points to an
equity stake in an existing business. Private extremely diverse phenomenon with varied
equity firms typically become active investors effects.
through taking board seats and specifying This divergence gives rise to the application
contractual restrictions on the behaviour of of different theoretical perspectives to the
© 2009 The Authors
Journal compilation © 2009 Blackwell Publishing Ltd and British Academy of Management. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
International Journal of Management Reviews Volume 11 Issue 4 pp. 361–380 361

Private equity: A review and synthesis
private equity phenomenon. Reviews of the (dominant in the finance literature and in
finance and strategy related private equity economics) and socio-economic (particularly
literature are contained in Cummings et al. influential in the management, industrial
(2007) and Wright (2007). We differentiate relations and political economy literature)
our approach by highlighting the principal approaches. We focus specifically on the differ-
theoretical starting points of this rapidly bur- ent ways in which these distinct traditions may
geoning literature, and the related existing allow us to conceptualize private equity. Third,
research evidence on the effects of private we then turn to the applied literature on private
equity on performance and employment equity, highlighting emerging themes and con-
relations. testations. In our conclusion, we seek to identify
This review thus brings together the main- possible areas for future enquiry, to promote a
stream finance literature, with the growing more nuanced understanding of this complex
body of literature that seeks from various per- phenomenon.
spectives to explore both the social and eco-
nomic dimensions of changes in corporate
Types of Private Equity Buyout
governance regime (Goergen et al. 2006;
Harcourt and Wood 2007; Sorge 2005). Given Private equity funded takeovers are diverse.
the focus of our analysis and space constraints, Broadly, there are two different types of
our literature review covers the direct impact of buyout, although they are conflated in some of
private equity and buyouts on two groups of the literature, which may lead to misleading
stakeholders where there has been particular conclusions as to its effects (BVCA 2006;
attention in the current debate: investors Moon 2006, 82). First are insider-driven
and (non-managerial) employees. While we buyouts where the existing management takes
provide a comprehensive discussion of the lit- control of the organizations, sometimes along-
erature relating to these two areas, we do not side a private equity firm. Insider buyouts
consider other aspects such as the antecedents include management buyouts (MBOs) and
to private equity transactions, the impact of management-led employee buyouts (MEBOs)
buyouts and private equity on firms’ strategic with employees often offered an equity stake in
changes, and accounting (profitability) and MEBOs. Second are outside-driven buyouts,
economic (productivity) performance; or the which include LBOs, management buy-ins
longevity and broader organizational transfor- (MBIs), investor-led buyouts (IBOs) and
mational effects of private equity. These areas hybrid buy-in MBOs that provide a mix of
are covered in the reviews cited above. We expertise which helps to reduce the informa-
recognize that there is a considerable body of tional asymmetries present in MBIs. Lever-
practitioner and popular literature on private aged buyouts are takeovers and de-listing of
equity that could serve as the basis for a more mature organizations. Often such takeovers are
general review on this topic. However, for heavily leveraged, the existing management
reasons of space, and scope, we have largely being replaced by a new managerial team
confined this review to the academic literature and/or with the new owners taking a more
on this topic. hands-on role than was previously the case. A
This paper is structured as follows. First, we MBI (Robbie et al. 1992) is simply an MBO in
introduce the different manifestations of private which the leading members of the management
equity, drawing core distinctions that guide our team are outsiders. Investor-led buyouts
subsequent discussions. Second, give the central involve the acquisition of a whole company or
changes to corporate governance that private a large division of a group, with the private
equity buyouts involve, we introduce and equity firm typically either retaining existing
highlight the key differences and underlying management to run the company or bringing in
assumptions of the alternative rational-incentive new management to do so.
362 © 2009 The Authors

Journal compilation © 2009 Blackwell Publishing Ltd and British Academy of Management
December 2009
opportunities, the emergence of private-equity-

Introducing the Principal Theoretical
backed buyouts could lead to the eclipse of the
Starting Points: Alternative Approaches
public corporation.
to Corporate Governance
Recent work by Djankov et al. has reinforced
The general corporate governance literature the view that the relationship between owner-
provides an important starting point for under- ship rights and those of other stakeholders rep-
standing private equity. In this section, we resent a zero-sum game (Djankov et al. 2003).
introduce the principal alternative theoretical In summary, the view of institutions within this
approaches to corporate governance. tradition is essentially a hierarchical one: insti-
tutions will incentivize actors to behave in spe-
cific ways, with specific outcomes.
Rational-Incentive Approaches
The bulk of the private equity literature follows
Developing Complementarity:
on the assumptions of the mainstream finance
The Socio-economic Tradition
approach to corporate governance, specifically,
agency theory (Jensen 1986, 1993). This per- A limitation of rational-incentive approaches
spective builds on the orthodox rational choice is that they discount the possible effects
tradition of economic theory. The latter tradi- of complementarity (Gordon and Roe 2003;
tion has been expanded to encompass concep- Hall and Soskice 2001). Socio-economic
tualizations of institutions as providers of approaches to complementarity argue that
incentives for rational actors (North 1990). more than one set of institutional configura-
Central to this approach is the notion of the tions may yield positive outcomes, and a
primacy of property rights, which, in turn, simple focus on ownership rights alone will not
were seen as a prerequisite of economic always work best. In practice, this suggests that
success. More recent accounts have broadened institutions have multiple effects and that a
this analysis to encompass the effects of law, focus on property rights may detract attention
politics and constitutional issues. La Porta and from the other positive effects of the operations
colleagues (1998, 2000) argued that investor of institutions: as such, it would represent a
rights were stronger in common law systems more nuanced alternative to the minimalist
than in their civil law counterparts; the former neo-liberal approaches.
would encourage practices that were more A particularly influential approach to under-
receptive to owner interests. standing complementarity and the relationship
Changes in the nature and terms of owner- between institutions, owner behaviour and
ship that can secure property rights more effec- firm-level practices is the varieties of capitalism
tively are desirable and likely to optimize (VOC) literature, rooted within the socio-
economic performance (Gordon and Roe 2003; economic tradition. This approach sees institu-
Rollinson and Dundon 2007). Agency-based tions as the centre of webs of social relations
theoretical approaches within this tradition (rather than the rational-incentive approach,
explore the problem of ensuring that managers which simply sees them as providers of incen-
really act as agents of owners. Private equity tives to rational actors), with practices impact-
takeovers may rein in managers who would ing on each other in a non-hierarchical manner.
otherwise be inclined towards empire building, Institutions cannot be seen as just providers of
redirecting their attention more squarely to the incentives and disincentives to rational actors,
bottom line (Bruton et al. 2002; Young and but represent active players that interact with
Scott 2004), and/or by bringing investors each other and with grassroots practices, with
inside. Jensen (1989) argued that where this constant feedback both embedding and remoul-
involved listed corporations in mature sectors ding patterns of behaviour. This literature
with excess free cash flow and few investment challenges the view that one configuration of
© 2009 The Authors 363

social institutions would necessarily yield the approaches (Erturk et al. 2008) as well as more
best outcomes (Hall and Soskice 2001). In orthodox political economy writings (Harvey
contrast, much of the mainstream finance lit- 2004).
erature, even when incorporating notions of Financialization has been taken as the
complementarity, tends to cling to notions of umbrella term for a range of practices and inno-
the superiority of the Anglo-American model vations, including a more proactive role for
of strong property rights (Gordon and Roe institutional investors, increasing emphasis on
2003). shareholder value and the increasingly impor-
A limitation of the VOC literature has been tant role of the financial sector (Cutler and
its assumptions of path dependence, and its Waine 2001; Stockhammer 2004). The increas-
difficulty in explaining internal diversity in ing importance of private equity raised increas-
practices and innovations in national contexts. ing doubt as to the alleged central role of
This literature would suggest that private shareholder value and stock markets as a central
equity represents a continuation, rather than a feature of financialization. This led to the devel-
departure from the Anglo-American liberal opment of the financialization approach to
market model, and, similarly, that the private private equity, with the suggestion that finan-
equity phenomenon will not fundamentally cialization represents a somewhat broader phe-
undermine the core features of coordinated nomenon characterized by the active reallo-
markets. This would explain why, while it has cation of value in favour of active institutional
had considerable impact within the fields of investors and fund managers, at the expense
socio-economics (Dore 2000; Hall and Soskice of other stakeholders (Froud et al. 2004).
2001), industrial relations (Brewster et al. Although an emphasis on shareholder value in
2007) and corporate governance more gener- listed companies may be achieved through both
ally (Goergen et al. 2006), it has rarely been corporate governance codes and executive
deployed to explain the effects of innovations remuneration developments, private equity has
in forms of ownership, and changes in the rela- the advantages of greater flexibility and greater
tionship between owners and the firm, includ- opacity regarding the manner in which organi-
ing private equity. For example, Goergen et al. zational resources are reallocated or disposed of
(2006) found that the behaviour of firms in the interests of short-term returns (ibid.).
towards employees following a takeover did While only a limited number of authors
not coincide with the patterns identified with within the broad financialization approach
VOC models: however, they similarly found a (notably Froud and Williams) have written
range of limitations with the explanations explicitly and in-depth on private equity, the
afforded by rational-hierarchical approaches to literature’s broader concern with the relation-
institutions. Thus the international diffusion of ship between financial intermediaries, ordinary
new forms of ownership regime need not investors and firms locates the perspective
necessarily constitute convergence with the within the context of a process of broader
UK/US liberal market model, but rather adap- economic and social change. As Froud and
tation in a manner that would represent both Williams (2007b, 344) argue, private equity
change and continuation of distinct national has ‘moved from marginality to centre-stage in
paths. the past decade’.
An alternative theoretical starting point for More recently, strands of the financialization
understanding private equity is what may be literature have highlighted the relative disem-
broadly referred to as the financialization powerment of savers vis-à-vis fund managers
approach. This school of thought is extremely (Erturk et al. 2004, 2008). While the former
broad, with various writers drawing on aspects have an interest in long-term security and
of regulation, post-modern conceptualizations sustainable growth, pension and related
of power and synthetic cultural economy investment fund managers emphasize the short

December 2009
term to maximize their bonuses: thus much meanings and interpretations at different times
of the risk is shifted back onto the shoulders (Martin 2002, 234). On the other hand, while
of policy-holders. On the one hand, this material ownership of property has become
approach highlights the problems of much of widely diffused, there remains a great imbal-
agency theory. Much attention is devoted by ance between this and actual power and mobi-
the latter to the supposed rights of owners, but lization based on such developments (Martin
little or none to the real suppliers of capital 2002). In other words, while wealth may be
(Young and Scott 2004): as suggested by dispersed, it is not ‘socialized’ or governed by
Foucault (1988), power is not a resource in the society at large (ibid.).
same way that physical wealth is, and hence
the two may not always coincide. Indeed, De
Rational-Incentive Approaches in Practice
Goede (2007) argues that complex sets of
laws and practices may favour specific inter- This theoretical tradition has had a particularly
ests over others, making for variations in strong impact on the understanding of the
financial inclusion, reflecting the uneven dif- effects of private equity. Critics of agency
fusion of ‘biopower’ within and between soci- theory have pointed out that this literature has
eties, again a conceptualization drawn from tended to neglect the rights of middle-class
Foucault (1988). savers whose investments provide the funds for
Langley (2007) points to the complex web institutional investors to plough resources into
of relations that link wider society with finan- private equity, and other innovative forms of
cial markets. This would include the increased investment: policy-holders have an interest in
role for mutual funds, the changed role of long-term stability and security, while fund
pension funds, direct and indirect individual managers have a stronger interest in high short-
investment in stocks and shares, and increased term returns (Young and Scott 2004); against
access to borrowing by those deemed sub- this, it could be argued that fund managers
prime (Langley 2007). Expanding networks represent a relatively diverse grouping, and
have encompassed both vulnerable borrowers those dealing with quoted equity may differ in
and large numbers of relatively modest suppli- behaviour from those investing in private
ers of finance, with both being locked into equity, an issue that would deserve further
highly unequal relationships with financial investigation.
intermediaries (ibid.). Hence, from this per- The bulk of the US-based literature either
spective the 2008 mortgage crisis is connected implicitly or explicitly falls squarely within the
to the ‘wholesale operations of global finance’ rational-hierarchical tradition. This literature
(Froud and Johal 2008, 108). Indeed, the generally uses large sample archival and
degree of competition in the financial sector is survey data to examine the effects of private
open to challenge (ibid.); while finance is equity on performance, employment and pro-
unstable, it also links together key players with ductivity at the firm level.
wider society on terms detrimental to the latter
(ibid., 107).
Alternatives in Practice
Drawing on the governmentality literature,
Langley (2007) provides a distinct interpreta- Social action: developments and extensions
tion that foresaw many of the recent develop- of rational hierarchical approaches. More
ments in financial markets. Martin (2002) links recent work that takes account of the effects of
together aspects of both these strands of think- social actions includes theoretical papers that
ing in a broadly cultural economy approach examine the role of private equity-backed
(Erturk et al. 2008). On the one hand, financial MBOs in releasing management to take
markets operate under assumptions of a shift- entrepreneurial actions and developing new
ing and paper reality that assumes different forms of cooperation with employees (Wright

et al. 2000). In other words, different owner- Financialization and private equity. There are
ship regimes may provide opportunities for a limited number of accounts that have brought
groups to act together in specific ways (Sorge the financialization perspective to bear in
2005). Large scale empirical evidence also understanding private equity. Focusing specifi-
identifies entrepreneurial actions by groups cally on the latter, Froud and Williams (2007a)
following a private equity buyout, such as argue that a defining feature is the high role of
new product development and entering new debt in funding takeovers. Building on social
markets Sorge (2005) argues that those acting economy accounts, they argue that the litera-
in an entrepreneurial fashion can have similar ture has sustained itself through the construc-
interests to managers in securing transactions tion of narratives, which both ‘normalize value
in certain ways such that costs become more capture’ by interests that are inimical to tradi-
predictable and less uncertain. Securing some tional stakeholders. They argue that:
transactions will make entrepreneurs more Private equity represents a rearrangement of own-
willing to take greater risks in other areas ership claims for value capture which then allows
(ibid., 187). Blackburn (2006) argues that value extraction, particularly for the benefit of the
private equity funds are themselves entrepre- few who are positioned as private equity principals
neurial; however, he cautions that, over time, or senior managers in the operating businesses.
pressures to boost the size of funds may mean This alternative view frames our argument about
the ‘spur to entrepreneurial gains may be the enduring legacy of private equity after its
blunted’. Echoing these theoretical arguments, bubble bursts (or its balloon deflates). (Froud and
a body of the applied literature on private Williams 2007a)
equity has attempted to synthesize action and
institutional approaches to understanding Echoing earlier arguments about the unequal
how private equity has adopted diverse relations in power between financial inter-
starting points, drawing on a wide range of the mediaries and suppliers of capital, they argue
alternative accounts. that:
financial engineering concentrates reward for the
Varieties of capitalism in practice. Recent benefit of the minority of capital providers who
developments of the VOC literature have provide equity and caps reward to the majority of
similarly taken account of the effects of social capital providers who supply cheap debt. (Froud
action, within specific sets of social structure and Williams 2007a)
and corporate governance regime (Hancke et al.
2007). To date, there has been little attempt to While Froud and Williams (2007a) argue
link this body of literature specifically to private that private equity takeovers can lead to ‘value
equity, although there is a burgeoning body of extraction through refinancing’, a range of dif-
literature bringing VOC perspectives to bear in ferent forms of value extraction may pre-date a
understanding employment relations practice private equity takeover. A limitation of the
more generally (Goergen et al. 2009; Gospel Froud and Williams (2007a) account is that it
and Pendleton 2004; Hall and Gingerich 2004; tends to discount the persistent feature of the
Hopner 2005). This literature focuses on the employment contract: the relative strength of
operation of relationships (rather than choices controllers of capital vis-à-vis other stakehold-
by, and trade offs between, profit maximizing ers tends to fluctuate over time, in line with
individuals) between groups and associations. changes in the broader economy (Kelly 1998).
Mutually beneficial complementarities will There is nothing particularly new about this, or
reinforce specific ownership regimes, and sets in inevitable associated contradictions and
of firm-level practice (Hopner 2005), although dissent. Both the VOC literature and the
innovations may also bring negative comple- financialization approach – and indeed, the
mentarities into play. orthodox rational-incentive approaches – have

December 2009
tended to downplay the role of action in the political economy or cultural economy perspec-
operation of institutions. In reality, not only do tives. As yet, there has not been sufficient sys-
institutions affect what people do, but the day tematic evidence within the financialization
to day actions of people and collectives will literature to prove that the effects of private
continuously remould institutions (Sorge equity are necessarily uniformly deleterious on
2005). non-owner stakeholders: as noted earlier, this
Financialization approaches have been con- would have necessitated a different method-
cerned mostly with shareholder value, but ological starting point (Froud and Williams
some of the insights have focused on the nature 2007a). At an empirical level, a very much closer
of buyouts and the role of financial intermedi- scrutiny of the relationship between power as an
aries, providing further relevant insights into operation (rather than a resource; this is a fun-
the effects of private equity. For example, damental underlying assumption of mainstream
Erturk et al. (2004) have looked at the negative postmodernism), and actual capital endow-
effects of heavily leveraged buyouts; this can ments and investor behaviour is needed. In con-
contribute to worsening chains of debt, with trast, the mainstream radical political economic
deleterious consequences for all but a few approach would point to inherent continuities in
insiders. Langley (2004) points to the dangers capitalism, the regular and cyclical nature of
of using target company pensions as a means periods of growth, recession and the always
of leveraging debt; this effectively dispos- contested reconfiguration of power relations
sesses employees from what was assumed to between owners and other stakeholders.
be their deferred pay. Froud and Williams’s
approach focuses on the internal dynamics of Coherence and diversity. The two principal
private equity: however, it does not consider theoretical strands, rational incentives and
the outcomes at macro level, as this would have financialization, fall into a similar trap of
necessitated a different research method: while imparting a coherence and functionality to
providing richness of insight into processes, emerging forms of ownership that are diverse
empirical generalizability of evidence based on in both their nature and their effects. They both
a limited panel of cases regarding the effects assume that private equity works in a coherent
of private equity on performance, work and way that has very clear outcomes for both
employment is not possible. owners and employees in a zero-sum manner.
The former will be better able to secure returns
Limits and possibilities of existing theory. on value invested, at least in the short term.
What are the relative advantages of these Meanwhile, employees will be worse off
alternative approaches? On the one hand, a (whether, as suggested by rational choice
rational-hierarchical approach to institutions accounts, this may be in their long-term inter-
may provide a template for the detailed est in making organizations work better, or, as
analysis of specific systemic features. On the is the case in the financialization literature, it
other hand, such a model carries with it is not).
prodigious ideological baggage, and may be Does private equity really work as a coherent
difficult to sustain. Private equity is a diverse entity? On the one hand, as Wood and Frynas
phenomenon, consisting of a complex range of (2006) caution, a system may persist if it is
experiments and innovations that represent functional to specific social interests, even if it
both a response to persistent systemic difficul- is diversely dysfunctional in a wide range of
ties, and one that has yielded very diverse areas to other social actors. On the other hand,
results. as Hollingsworth (2006) notes, the process of
There are similar problems with the finan- systemic change is about experimentation,
cialization literature, which tends to be encoun- rupture and continuity. Indeed, as noted earlier,
tered in journals associated with heterodox there is considerable evidence to suggest that

the neo-liberal age is not a coherent growth value capture. Value capture may arise from
regime at all, given that it has performed no transfers from other stakeholders, for example
better over the past 20 years than more coordi- through job losses. Value creation can arise
nated markets, and, indeed worse than the pre- from improved efficiency and increased effec-
ceding ‘golden age’ of the 1950s and 1960s tiveness. Profitability may increase if a given
(Wolfson 2003). It is similarly no more immune amount of sales revenue can be achieved with
to short-term fluctuations than Coordinated fewer employees, as employment costs would
Market Economies in Western Europe (ibid.; cf. decline. There is thus a need to analyse sales
OECD 2007). This would suggest that contem- revenue and employment growth separately to
porary advances in regulationist thinking, obtain insights into how potential profitability
which focus on questions of internal diversity and productivity improvements are achieved.
and systemic change (Wright and Wood 2008) Real economic and social performance mea-
may provide a fruitful theoretical starting point sures relate to measures of total factor produc-
for future enquiries in this area. Such tivity (TFP), typically most appropriately
approaches point to the diverse and multi- assessed at establishment rather than firm level
facetted nature of institutional change, internal (Cumming et al. 2007).
diversity within and across specific areas of Detailed reviews of 1980s evidence on firm
economic activity, and the role of active agency performance following buyout are contained in
– and experimentation, with inevitably mixed Jensen (1993) and Thompson and Wright
results – in moulding the nature of systemic (1995). Cumming et al. (2007) provide a
transformation (ibid.), arguments also alluded review of this literature from the mid-1990s
to in more synthetic accounts, such as that by onwards, while Kaplan and Stromberg (2009)
Sorge (2005). provide a comparison of the first and second
buyout waves. In contrast, we provide a brief
comparative overview, highlighting the differ-
Empirical Outcomes: Measurement and
ences between the first and second waves
Firm-level Evidence
and introducing more recent evidence not
Various measures have been used to assess the previously covered.
performance of private equity and buyout With respect to the first wave in the 1980s,
investments (Cumming et al. 2007). The most US evidence indicates substantial average
appropriate measure depends on the aspect of improvements in profitability and cash flow
performance being examined and the stake- measures for the period one year before the
holder for whom it is being assessed. Firm-level transaction to up to three years afterwards
accounting returns are typically measured using (Jensen 1993; Thompson and Wright 1995),
a profitability or cash flow measure deflated by while UK and Dutch evidence shows improve-
some measures of the resources used to gener- ments in profitability and working capital man-
ate those returns or the revenues generated by agement which are higher than in comparable
those assets. While the aim may be to compare non-MBO firms over a period from two to five
performance changes before and after private years after buyout (Bruining 1992; Wright
equity investment in the buyout, there is also a et al. 2006). In contrast, French evidence sug-
need to adjust for changes in comparative non- gests that buyout performance declines after
buyout firms during this period in order to the transaction is consummated (Desbrierers
isolate the buyout effect. Accounting measures and Schatt 2002). More recent evidence from
can be subject to managerial manipulation, and the 1990s/2000s suggests that the profitability
accounting profits are not perfectly correlated of public to private (P2P) buyouts is less strong
with real performance. Profitability is also than for the 1980s period (Guo et al. 2007;
problematical, as changes in this measure fol- Weir et al. 2008) and that the most significant
lowing buyout confound value creation and gains relate to improvements in liquidity.

December 2009
Evidence from divisional, family and second- important contributor to improved performance
ary buyouts completed between 1993 and 2003 (Cotter and Peck 2001). Industry specialization
shows significantly higher growth and to a of private equity firms adds significantly to
lesser extent efficiency improvements in divi- increases in operating profitability of private-
sional cases, but profitability was not signifi- equity-backed buyouts during the first three
cantly greater (Meuleman et al. 2009). years (Cressy et al. 2007a). Data from the
US plant-level data from the 1980s shows 1990s/2000s shows more experienced private
that MBO plants had higher TFP than repre- equity firms add greater value to the businesses
sentative establishments in the same industry in which they invest (Gottschalg and Wright
before they changed owners (Lichtenberg and 2008), with this effect being especially notable
Siegel 1990). UK evidence from the 1990s in divisional buyouts (Meuleman et al. 2009).
shows significant improvements in efficiency Notwithstanding this widespread, generally
at the firm level compared with non-buyout positive evidence regarding firm profitability
firms (Amess 2002, 2003), while plant-level and performance, considerable debate has
evidence indicates that MBO establishments focused on the effects of private equity buyouts
were less productive than comparable plants on two groups of stakeholders: investors and
before the transfer of ownership but experi- employees. The next two sections address
enced a substantial increase in productivity these aspects in turn.
after buyout (Harris et al. 2005).
Studies have attempted to assess the extent
Empirical Outcomes of Private Equity for
to which these improvements are generated by
Stakeholders: Investors
particular strategies adopted by the buyouts
and by the post-buyout governance and incen- We selected all publicly available academic
tive structure. Evidence from the 1980s shows studies that have examined returnees to inves-
that P2P buyouts are often followed by tors based on both fund levels and firm-level
refocusing and divestment (Easterwood 1998; research; we omit studies conducted by the
Liebeskind et al. 1992; Seth and Easterwood private equity industry (Table 1). These large
1993; Smart and Waldfogel 1994; Wiersema sample academic studies have attempted to
and Liebeskind 1995). Further, capital expen- estimate risk-adjusted rates of return and to
diture typically fell after the buyout but the identify whether private equity deals generate
effects on research and development are less better or worse returns than investing in listed
clear (Lichtenberg and Siegel 1990; Long and securities gross and net of fees, which are typi-
Ravenscraft 1993). Evidence from the 1980s cally missing from industry studies. Studies
also indicates that asset sales are offset by new have used various approaches to adjusting for
capital investment, with significant increases in risk and survivor bias. Some studies have taken
new product development and other aspects of a conflated view of private equity, which
corporate entrepreneurship (Bull 1989; Green includes early stage venture capital. Some
1992; Wright et al. 2006). Recent evidence studies use data from single funds or single
from the 1990s/2000s also indicates increases limited partnerships (LPs) while others involve
in innovative activity as measured by patent large numbers of funds.
citations (Lerner et al. 2008). A number of insights are apparent. First, the
Evidence from the 1980s shows that man- existing literature is dominated by US-based
agement team shareholding size has a larger accounts, although some studies have been
impact on relative performance compared with conducted within the UK. There is very little
leverage in both US and UK buyouts (Denis evidence on the performance of such funds
1994; Malone 1989; Phan and Hill 1995; within coordinated market economies. Sec-
Thompson et al. 1992). Active monitoring and ondly, the performance of buyouts is particu-
involvement by private equity firms is also an larly mixed and context specific.

Table 1. Studies on returns to private equity
Type of Conflated venture capital and private equity

private equity MBOs approaches
US studies Investors in post-buyout capital earn a median Mature funds started 1981–1993 generate IRRs
market-adjusted return of 37% (Kaplan 1989a) in excess of S&P 500 returns net of fees;
LBO funds have a value-weighted IRR of 4.6%, Buyout funds generally outperform venture
commensurate with factor risks borne by funds, partially reflecting differences in
investors; considerable variation in fund returns leverage used in investments; sample from one
(Jones and Rhodes-Kropf 2003) LP with disproportionate share of (larger)
LBO fund returns gross of fees earn returns in buyout funds (Ljungqvist and Richardson 2003)
excess of S&P 500 but net of fees slightly below; Early and later stage funds have higher returns
persistence in returns among top performing than buyout funds in funds raised 1991–1998;
funds; higher returns for funds raised in 1980s; variation in returns by type of institution;
funds raised in boom times less likely to raise presence of unsophisticated
follow-on funds and thus appear to perform less performance-insensitive LPs allows poorly
well (Kaplan and Schoar 2005) performing GPs to raise new funds (Lerner
Risk-adjusted performance of US buyouts et al. 2007)
significantly greater than S&P index (Groh and
Gottschalg 2006)*
After adjusting for sample bias and overstated
accounting values for non-exited investments,
average fund performance changes from slight
overperformance to underperformance of 3% p.a.
with respect to S&P 500; Gross of fees, funds
outperform by 3% p.a.; venture funds
underperform more than buyout funds; previous
past performance most important in explaining
fund performance; funds raised 1980–2003
(Phalippou and Gottschalg 2007)*
Buyout fund managers earn lower revenue per
managed dollar than managers of VC funds.
Buyout fund managers generate more from fees
than from carried interest. Buyout managers build
on prior experience to have significantly higher
revenue per partner despite funds having lower
revenue per dollar (Metrick and Yasuda 2007)
UK studies Private returns to investors in 321 exited buyouts Effects can be beneficial, as private equity
enhanced by context-dependent corporate investors are in a position to disseminate best
governance mechanisms (Nikoskelainen and practices, through knowledge of cross section
Wright 2007) of firms (Moon 2006)
General partners in successful mid-sized funds
can expect carried interest to generate £5–15
million on top of their salaries, while general
partners in large, successful funds can expect
r50–150 million (Froud et al. 2007; Froud and
Williams 2007a)
Multi-Country Based on 259 buyouts, mean (median) buyout Private returns to investors in relation to law
Studies returns net of the MSCI index were 21.5% (18.5%) quality, fund characteristics and corporate
in the US and –1.0% (13.4%) in the UK over governance mechanisms (Cumming and Walz
1984–2001 in the 1984–2001 period (Cumming 2004)
and Walz 2004)
*US and non-US.
On balance and after adjusting for risk, managed dollar than managers of VC funds.
buyout stage funds generate lower returns than Returns on buyout funds are higher for funds
early stage venture capital (VC) investments. raised in the 1980s than for those raised in
Buyout fund managers earn lower revenue per the 1990s. Funds raised in boom times seem

December 2009
less likely to raise follow-on funds and thus than those from the first wave. There is some
perform less well. consistency in the findings of the employment
The more established and experienced funds effects between the first and second period,
generally achieve higher returns. Funds that although the detailed impact appears associ-
invest in fewer projects per fund manager ated with whether a study was conducted in a
achieve higher returns, suggesting that smaller recessionary period, particularly in the early
portfolio sizes per manager provide improved 1980s and early 1990s.
screening and greater value added. Higher Once again, it is evident that the effects are
funds managed per partner/investment execu- very mixed. Where employee rights are more
tive in larger buyouts compared with smaller firmly secured by law, convention and the
buyout funds and VC funds results in higher countervailing power of employee collectives,
returns per partner/investment executive. managers will be in less of a position to cut
Investor (LP) characteristics are also impor- back on staff (Wood et al. 2004). However, as
tant, with there being a wide range in returns the literature is overwhelmingly dominated by
between endowments, and to a lesser extent accounts drawing on UK and US evidence,
public sector pension funds, than banks and the Dutch context apart, the employment
other investors. The authors indicate that the effects in coordinated market economies,
presence of unsophisticated performance- where employment rights are stronger, merits
insensitive LPs allows poorly performing GPs further examination.
to raise new funds. The employment effects are particularly
At the buyout deal level, US evidence sug- adverse in full LBOs/MBIs. It may be easier
gests a positive and significant effect of for new controlling interests to renege on
buyouts. Firm-level data on exited buyouts in implicit contracts (Shleifer and Summers
the UK finds an average (median) return of 1988), and new buyers may have a greater
22.2% (–5.3%), net of market index returns, interest in rapid value realization, followed by
indicating a marked skewness in returns an exit in the short or medium terms. In con-
(Nikoskelainen and Wright 2007). Initial trast, the employment effects are more posi-
public offering (IPO) exits outperform trade tive in the case of MBOs. This does not
sales and secondary buyouts. Returns are necessarily suggest that MBO managers will
significantly related to the size of the have similar interests to workers, unless they
buyout target, acquisitions carried out during see the buyout as a mechanism to entrench
the holding period and differences between themselves; in these cases, it may be difficult
MBOs and MBIs. to attract private equity investors. Nonethe-
less, compared with MBIs, existing managers
most likely have more detailed knowledge
Outcomes of Private Equity for
about the nature of human assets which may
Stakeholders: Employees
be essential for long-term organizational com-
Tables 2–4 explore the effect of private equity petitiveness (Harcourt and Wood 2007). This
on employees. We selected all studies that have would suggest that organizations subject to
addressed issues relating to employment levels MBOs are likely to perform better over time,
and changes (Table 2), wages and remunera- an issue which, again, would merit further
tion (Table 3) and employment/HRM practices investigation.
(Table 4). An alternative explanation of differential
We divide studies between those that cover employment effects is that the status quo ante
the first wave of private equity and buyouts in in MBIs may not have been sustainable. MBIs
the 1980s and those that cover the second wave are typically more likely to have been under-
from the late 1990s to 2000s. In general, performing and require restructuring to restore
sample sizes in more recent studies are larger viability; as such, pre-buyout employment

Table 2. Employment effects of private equity
Authors and
sample periods Nature of transactions Findings
US studies 1980s
Kaplan (1989a) 76 large PTP LBOs Small increase in employment post-buyout but falls after
adjusting for industry effects
Smith (1990) 58 US MBOs of listed Small increase in employment post-buyout but falls after
corporations adjusting for industry effects
Lichtenberg and 131 US LBOs, MBOs; 1132 8.5% fall in non-production workers over 3-year period;
Siegel (1990) establishments production employment unchanged
Muscarella and 72 US Reverse LBOs Median employment fell between LBO and IPO, but LBOs
Vetsuypens (1990) without asset divestment reported median employment
growth in line with top 15% of control sample; divisional
LBOs more likely to increase employment than full LBOs
Opler (1992) 44 US LBOs Small increase in employment post-buyout
1990s/2000s
Davis et al. (2008) US matched PE-backed and Employment grows more slowly in PE cases than in control
non-PE-backed firms and pre-buyout and declines more rapidly post-buyout but in 4–5th
establishments year employment mirrors control group; buyouts create similar
amounts of jobs to control and more Greenfield jobs
UK studies 1980s
Wright and Coyne 111 UK MBOs, mainly PE 44% of firms shed employees on buyout; 18% of pre-buyout
(1985) backed jobs lost subsequent re-employment but below pre-MBO levels
Wright et al. 182 UK MBOs/MBIs, mainly 25% of firms shed employment on buyout
(1990) PE backed
Wright et al. 182 UK MBOs, MBIs, mainly Average 6.3% fall in employment on MBO but subsequent
(1992) PE backed 1.9% improvement by time of study
Robbie et al. 59 UK MBIs 38% reduced employment
(1992); Robbie
and Wright (1995)
Robbie et al. 64 UK MBOs in Receivership Over three-fifths did not effect redundancies on buyouts, a
(1993) sixth made more than 20% redundant and that the median
level of employment fell from 75 to 58
1990s/2000s
Amess and Wright 1350 UK MBOs and MBIs; Employment growth is 0.51 of a percentage point higher for
(2007a) comparator group of 4029 MBOs after the change in ownership and 0.81 of a
non-LBO firms percentage point lower for MBIs
Wright et al. 319 UK MBOs, 120 UK MBIs On average, employment initially falls but then grows above
(2007) pre-buyout level in MBOs; In MBIs, employment falls after
buyout; majority of MBOs and MBIs experience growth in
employment
Amess and 533 UK MBOs, MBIs, private After controlling for endogeneity in selection of buyouts,
Wright (2007b) equity and non-private equity- difference between employment effects of private equity vs
backed firms; comparator non-private equity-backed buyouts not significant
sample of non-LBO firms
Work Foundation UK MBIs, MBOs Based on same data as Wright et al. (2007) and Amess and
(2007) Wright (2007a), MBOs increased employment. MBIs tended
to cut it by an average rate of 18% over 6 years. Remaining
workers often experienced significantly less job security
Cressy et al. 122 UK PE-backed and Employment in buyouts falls relative to control group for
(2007b) non-PE-backed companies first four years but rises in fifth; Initial rationalization
creates basis for more viable job creation
Amess et al. 232 UK LBOs, MBOs, MBIs, PE-backed LBOs have no significant effect on employment.
(2008) acquisitions, 133 PE-backed; 215 Both non-PE-backed LBOs and acquisitions have negative
non-LBO acquisitions employment consequences
Weir et al. (2008) 122 PTP LBOs, MBOs; PE and PTP employment fall greater than industry average in t+1
non-PE-backed; comparator but not significantly different in other years; non-PE-backed
group of firms remaining public PTPs more likely to create jobs than PE-backed PTPs
Froud and Review of Debenhams, Bird’s Eye Liquidation of assets, leading to reduced employment
Williams (2007b) and Little Chef/Travelodge cases opportunities or long-term sustainability issues

December 2009
Table 3. Wage and remuneration effects of private equity
Author and sample period Sample Findings
US 1980s
Lichtenberg and Siegel (1990) 131 US LBOs, MBOs; Decline in relative compensation of non-production
1132 establishments workers
UK 1990s/2000s
Amess and Wright (2007a) 1350 UK MBOs, MBIs Average wages in both MBOs and MBIs are lower
than their non-buyout industry counterparts
Wright et al. (2007) 319 UK MBOs, 120 UK MBIs Wages grow post-buyout compared with pre-buyout
year; the majority of MBOs and MBIs showed growth
in wages
Thornton (2007) UK MBOs, MBIs as Wright Significant wage cuts in MBIs
et al. (2007)
Amess et al. (2008) 232 UK LBOs, MBOs, MBIs, Employees gain higher wages after acquisitions but
acquisitions, 133 PE backed lower after LBO
Table 4. Work and employee relations effects of private equity
Author and sample period Sample Findings
UK 1980s/early 1990s
Wright et al. (1984) 111 UK MBOs mainly 65% recognized unions before buyout, falling to 60%
PE backed afterwards; 40% of firms recognized one union; 8% of firms
involved wider employee share ownership after buyout
Bradley and Nejad (1989) NFC MEBO in UK Employee share ownership had greater effect on
‘cooperation’ than on performance but did improve
employee cost consciousness
Wright et al. (1990a) 182 UK MBOs, MBIs 58% of firms recognized unions before buyout, 51%
mainly PE backed afterwards; 52% of firms recognized one union; 14.3% of
firms involved wider employees in share-holding; 6% had
share option scheme pre-buyout, 10.4% afterwards
Pendleton et al. (1998) 4 Privatized MEBOs Shareholding and participation in decision-making
in UK [234 individual associated with feelings of ownership; perceptions of
respondents] employee ownership significantly associated with higher
levels of commitment and satisfaction
UK and Netherlands
mid-1990s/2000s
Bacon et al. (2004) 145 UK MBOs, MBIs Buyouts resulted in increased employment, adoption of new
reward systems and expanded employee involvement;
‘insider’ buyouts and growth-oriented buyouts had more
commitment-oriented employment policies
Bruining et al. (2005) 145 UK MBOs/MBIs MBOs lead to increases in training and employee
and 45 Dutch empowerment. These effects were stronger in the UK than
MBO/MBIs in the Netherlands
Amess et al. (2006) 1959 UK-based MBOs Employees in MBOs have more discretion over work
and non-MBOs practices
Bacon et al. (2008) 145 UK MBOs/MBIs Insider buyouts show greater increase in high commitment
and 45 Dutch practices; buyouts backed by private equity firms report
MBOs/MBIs, PE and fewer increases in high commitment management practices
non-PE backed
Thornton (2007) UK MBOs, MBIs Various case examples of positive and negative effects of MBO/
MBIs on HRM practices and employee equity participation
GMB (2006) MBIs; no sample Negative effects on remuneration and pension provisions
details provided

levels may not have been sustainable for the the extent to which the position of unions in
business to survive (Robbie and Wright 1995). many workplaces is a relatively durable one,
With little alternative except closure, a private the UK’s reputation as a heavily deregulated
equity deal even with a reduced workforce may liberal market economy notwithstanding. This
have its attractions. It is not clear why unions would, in turn, reflect the extent to which
would resist working with private equity firms industrial relations practice is not just the
to support firms in financial difficulties or why product of formal laws, but also of other forms
unions should protect and support existing of regulation, consisting of informal norms,
managers and owners who are responsible for rules and conventions (Jessop 2001). Such
poor business performance jeopardizing their informal arrangements make for continuity and
members’ jobs. There may even have been predictability in the workplace, lowering trans-
plans for significant labour shedding prior to action costs; for a similar reason, they are
buyout (Work Foundation (2007). The alterna- likely to diffuse and persist across a national
tive may be acquisition, but the employment economy (Marsden 1999). Whatever changes
records of acquisitions do not suggest unions in ownership may take place, such pressures
should necessarily prefer these methods to may still direct firms towards generally
buyouts to turn round failing companies. accepted practices in employment relations.
Actions to restructure the business on buyout, This does not mean that the UK – or any other
including labour shedding, appear to reduce national economy – is not subject to ongoing
the likelihood that the firm will subsequently experimentation and innovation at firm level,
fail with the likely even higher loss of but simply that there are a range of constraints
employment (Wright et al. 1996). Increases in operation that may similarly deter employ-
in employment post-buyout or post-buy-in ers (Marsden 1999).
may take some time to emerge as the firm Second, buyouts were often associated with
goes through restructuring to create a more the introduction of new-style HRM policies.
viable entity (Cressy et al. 2007b); there is a Three studies provided evidence of a greater
danger, therefore, that critiques focusing on emphasis on training and individually based
initial employment effects may be taking a empowerment schemes (Bacon et al. 2007;
short-termist view. Bruining et al. 2005). Training is a complex
The literature suggests that wage effects are measure: higher staff turnover which, in turn, is
likely to be more generally deleterious. Based likely to increase if employees leave to pre-
on US evidence, Lichtenberg and Siegel (1990) empt being made redundant, will necessitate
found declining wages for non-production greater spending on induction training
workers. Amess and Wright (2007b) for the UK (Goergen et al. 2009). Training may also
note lower buyout wages than in non-buyout increase if there is a need to acquaint employees
industry counterparts (Wright et al. 2007). with new work practices designed to improve
There is little US-based research on the efficiency. Hence, the increased spend in train-
effects of private equity on work and employ- ing may be a reflection of a reduction in security
ment relations other than in terms of tenure and of tenure: more detailed examination of the type
wages. As with the previous dimensions and nature of training being provided is needed
explored, it is evident that there is again little before conclusions can be reached on the rela-
evidence on the effects of private equity opera- tionship between changes in ownership regime.
tions on employees in coordinated market Empowerment is similarly complex: there
economies; the bulk of this literature draws on are a range of potential different employee
the UK experience. voice mechanisms and practical manifestations
However, a number of trends are apparent. of participation, which vary greatly in their
First, private equity has only a modest negative efficiency and effectiveness (Brewster et al.
effect on union recognition. This underscores 2007). The effects of changes in ownership

December 2009
regime on genuinely empowering employees conclusions can be reached about whether

still represents a very under-researched area; certain types of private equity deal are inher-
there is a pressing need for further investigation ently ‘bad’ while others may be inherently
on this area, building on the foundations pro- ‘good’, there is an important need for system-
vided by the existing work on the subject (cf. atic research that explores the rationale for
Bacon et al. 2007; Bruining et al. 2005; Pendle- such differences.
ton et al. 1998). Thirdly, as noted earlier, there has been a
tendency for the US literature to be dominated
by rational choice approaches towards under-
Emerging Trends and Priorities for
standing institutions and practice: in part,
Future Research
reflecting the dominance of such models both
This literature review has highlighted a number within the US literature, and the discipline
of important trends. First, the bulk of research in areas of finance and economics. This tradition
this area is by scholars in the US and the UK, assumes one specific model – the neo-liberal
within the rational choice tradition. In contrast, one – is always superior, a viewpoint that is
there is relatively little work conducted on coor- debatable in view of empirical evidence to the
dinated market economies, notable exceptions contrary (OECD 2007).
being the studies by Margolis (2006) and In contrast, within the UK, there have been
Wright et al. (2006). This may reflect the per- attempts to develop an alternative approach –
sistence of institutional constraints limiting the the financialization approach – to understand-
spread of such practices within continental ing changes in the operation of financial inter-
Europe. Such constraints could include the con- mediaries, drawing on both regulation theory
tinued dominance of industry as opposed to and aspects of cultural and broadly postmodern
firm-specific pension funds in many countries, approaches towards power within and between
the stronger and more deeply entrenched nature organizations (Froud et al. 2004). Specific
of employee rights in civil law countries (La attempts to apply this perspective to under-
Porta et al. 2000), and the persistently more standing private equity have been provided by
long-term approach of many investor group- Froud and Williams (2007a,b), drawing exten-
ings. However, as private equity will probably sively on recent cultural economic writings in
expand its global scope in the future – the this area (Froud et al. 2008).
present financial crisis notwithstanding – this Alternatively, there have been attempts to
again represents an important area for future develop more synthetic approaches, pragmati-
research. This opens the question of whether the cally drawing together different aspects of insti-
effects of private equity vary according to insti- tutionalist thinking with an exploration of the
tutional context, or are more general. The effects of the active choices of individuals and
increase in private equity activity in continental groups (Bacon et al. 2007; Bruining and White
Europe by the mid-2000s provides a growing 1992). While extremely influential in other
body of empirical evidence to understand the areas of business and management studies, the
uneven and contingent effects of innovations in VOC literature has made little impact on this
practices in different contexts. area, yet private equity and buyout markets are
Secondly, private equity is a very diverse now developing in such globally diverse con-
phenomenon: there has been a tendency to contexts as Western and Eastern Europe, Japan,
flate the different forms of buyout when, in China, etc. (Wright et al. 2007). This lack
fact, their effects vary greatly. Management of attention to the VOC approach partly
buy-ins and LBOs appear generally to have reflects the dominance of the rational choice
less positive effects for stakeholders than other approach in finance journals. From a VOC
forms of private equity activity; while MBOs perspective, private equity would have distinct
seem very much better for employees. Before effects that may vary according to the variety

of capitalism, an approach that would discount pared with the first wave of private equity and
the extent of internal systemic diversity, and the buyouts that appeared in the 1980s and early
role of experimental innovations in bringing 1990s, many of the studies emerging from the
about change (Hollingsworth 2006). There are, second wave are using substantially larger
however, interesting and important empirical samples (Table 2). There remains a pressing
questions concerning whether and what differ- need for more comparative meso-data, most
ences in private equity behaviour in different notably in the form of firm-level survey evi-
countries can be ascribed to VOC or whether dence, building on the limited number of
such behaviour transcends such institutional studies based on the latter (Bacon et al. 2004,
variations. Evidence from a related area on 2007).
the trans-European effects of takeovers and
mergers suggests that trends in practices do not
follow a dichotomous LME/CME distinction Acknowledgments
(Goergen et al. 2006). The authors are grateful to the editor and three
Relatively under-utilized theoretical appro- anonymous reviewers for comments on an
aches include developments and extensions of earlier version.
regulationist theory and other advances in criti-
cal institutional studies (Jackson 2005). Such
accounts highlight the nature of internal diver- Notes
sity within national models, pointing to the 1 Address for correspondence: Geoffrey Wood,
effects of non-linear system development and School of Management, University of Sheffield, 9
change, driven by both experimentation and Mappin St, Sheffield S1 4DT, UK. E-mail:
hybridization, the complex nature of systemic G.T.Wood@sheffield.ac.uk
complementarity and the effects of region and 2 For a detailed practical guide see Gilligan and
sector (Crouch 2005; Boyer 2006). Interest- Wright (2008).
ingly, much of the theoretical literature on
private equity appears stuck in the 1990s, per- References
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private transactions, private equity and performance Geoffrey Wood is from the School of Manage-
in the UK: an empirical analysis of the impact of ment, University of Sheffield, 9 Mappin St,
going private. Paper presented at EFA Conference, Sheffield S1 4DT, Sheffield, UK, and is Visiting
Athens, Greece, June. Professor at the Nelson Mandela Metropolitan
Wiersema, M. and Liebeskind, J. (1995). The effects of University, South Africa. Mike Wright is from
leveraged buyouts on corporate growth and diversi- the Centre for Management Buy-out Research,
fication in large firms. Strategic Management Nottingham University Business School,
Journal, 16, 447–460. Jubilee Campus, Nottingham NG8 1BB, UK,
Wolfson, M. (2003). Neoliberalism and the social and Rotterdam School of Management,
structure of accumulation. Review of Radical Politi- Erasmus University Rotterdam, 3000 DR Rot-
cal Economics, 35, 255–263. terdam, The Netherlands.
Wood, G. and Frynas, G. (2006). The institutional


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International Journal of Management Reviews (2009)

Private equity: A review

Geoffrey Wood1 and Mike Wright

management which include detailed reporting

International Journal of Management Reviews Volume 11 Issue 4 pp. 361–380 361

362 © 2009 The Authors

opportunities, the emergence of private-equity-

© 2009 The Authors 363

364 © 2009 The Authors

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366 © 2009 The Authors

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Table 1. Studies on returns to private equity

Type of Conflated venture capital and private equity

*US and non-US.

370 © 2009 The Authors

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Table 2. Employment effects of private equity

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Table 3. Wage and remuneration effects of private equity

Author and sample period Sample Findings

Table 4. Work and employee relations effects of private equity

Author and sample period Sample Findings

© 2009 The Authors 373

374 © 2009 The Authors

regime on genuinely empowering employees conclusions can be reached about whether

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376 © 2009 The Authors

© 2009 The Authors 377

378 © 2009 The Authors

© 2009 The Authors 379

380 © 2009 The Authors

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