Report exposes "......[buyout firms] breaking implicit agreements with respect to pay that transfer wealth from employees to the new owners"
From: Scotland on Sunday Sun 4 Mar 2007
PRIVATE EQUITY PAY RISE SHAME
By DOUGLAS FRIEDLI
PRIVATE equity-backed companies give smaller pay rises than other firms, according to a report which is likely to fuel the controversy over the growing industry.
Staff working for bought-out companies, usually backed by private equity, received average pay rises of between £84 and £231 a year less than their counterparts in quoted and family firms, according to the Centre for Management Buyout Research.
The report states: "The results are consistent with [buyout firms] breaking implicit agreements with respect to pay that transfer wealth from employees to the new owners."
The latest report is likely to prove an embarrassment, given that it comes from an impeccable source backed by Barclays Private Equity and Deloitte, the accountancy firm.
CMBOR http://www.nottingham.ac.uk/business/cmbor/ found that workers at companies subject to a management buy-in, where investors bring in new directors, had almost no pay rise.
And workers at companies where there has been a management buyout, where investors back the existing board, saw their wages rise by a third less than their counterparts in mainstream companies.