Investor returns could come at the expense of employee satisfaction and the authors show that employee satisfaction (compensation and culture) declines on average following LBOs. Long-tenure and lower-skill workers are most adversely affected. One-time layoffs do not fully explain the effects, but high-leverage deals are robustly correlated with them. Heightened uncertainty about job loss plays an important role in explaining the effects.
Owners curious about the impact on the employee experience of culture and compensation following a sale to a financial buyer will be interested in the results of this study.
Do Employees Cheer for Private Equity? The Heterogeneous Effects of Buyouts on Job Quality
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