The sectoral consequences of private equity acquisitions

Spillovers in wages and employment

Bibliographic Data

ID21334718
AuthorsKonstantinos Eleftheriou (0000-0003-4423-8451, Department of Economics University of Piraeus Piraeus Greece), G Wood (0000-0001-9709-1823, DAN Management and Organizational Studies Western University London Ontario Canada, corresponding author), Marilou Ioakimidis (0000-0002-8006-2249, Department of Business Administration National and Kapodistrian University of Athens Athens Greece), Iliya Komarev (0000-0001-9892-5981, Montpellier Business School Montpellier France), Dimitrios Thomakos (0000-0003-2896-8163, Department of Business Administration National and Kapodistrian University of Athens Athens Greece)
Year2025
Volume56
Issue1
Pages22-45
Publication date2025-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueIndustrial Relations Journal (JOURNAL)
Journal identifiersISSN: 0019-8692 • E-ISSN: 1468-2338
PublisherWiley (PUBLISHER • GB)
DOI10.1111/irj.12448
OpenAlexW4403137745
LanguageEN
References cited65

Existing Industrial Relations (IR) research suggests that Private Equity (PE) takeovers may have profound effects on the target firm's industrial relations policies and practices, most notably in terms of security of tenure and relative proclivity to engage in redundancies. This study supplements the literature by exploring the effects of PE takeovers on other firms in the same industry. We find that PE takeovers increase the sensitivity of target firms to wage costs; when there is an upward pressure on wages, they respond by shedding jobs to a greater extent than their non‐acquired same‐sector competitors. However, workers in non‐acquired firms were less likely to move to a firm that had been acquired by PE, even if pay was more than sectoral rates. Even if there is a strong emphasis on restraining wage costs in the target firm, PE takeovers do not necessarily lead to the degradation of employment practices elsewhere in the sector; rather, they may provide competitors opportunities to entice talented and skilled employees from the target firm

Business · Competitor analysis · Economic growth · Economics · Equity (law) · Labour economics · Private sector · Wage · Corporate Finance and Governance · Industrial relations · Innovation Policy and RD · Private Equity and Venture Capital

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