Critical Analysis Shows Private Equity Job-Creation Claims "Worthless"
In a paper commissioned by the UK T&G, David Hall of the University of Greenwich Business School examines the methodologies underpinning the principal surveys and reports on private equity buyouts and job creation, and finds their claims to be "effectively worthless".
Hall examined the reports - in large part commissioned by private equity associations - which, without ever having undergone critical evaluation, are invariably cited by the funds and their lobbyists - and concluded that they all "suffer from a number of flaws, both in sampling and in data quality." "Most of the assertions made by commentators, and some made by the reports themselves", writes Hall, "cannot be justified on the basis of the evidence from existing surveys. Problems of self-selection and the difficulty of verifying data on employment arise from the information opacity which is a systematic feature of private equity buyouts. The most reliable results suggest that buyouts generally depress wages but there is no clear overall effect on employment compared with other forms of ownership."
For a copy of the full report, write to
adodgshon@tgwu.org.uk