The Global Economic Impact of Private Equity Report 2009

The report finds that private equity-owned firms generally exhibit superior management practices and higher labour productivity growth compared to other ownership groups. In the US, productivity gains are driven largely by the reallocation of activity to more productive establishments and the closure of underperforming ones. In France, private equity acts as an engine of growth for small and medium-sized enterprises, particularly those facing financial constraints. Globally, private equity activity is most prevalent in wealthier nations, with success in buyouts strongly linked to favorable operational environments, including lower corruption and fewer barriers to starting a business.

• Private equity-owned firms are on average the best-managed ownership group, significantly outperforming government-, family-, and privately owned firms across a wide range of management practices, even when controlling for country, industry, size, and employee skills.
• The high average management scores in private equity firms are primarily due to the absence of a 'tail' of very badly managed firms, whereas government- and family-owned firms have substantial numbers of poorly managed entities.
• Private equity firms demonstrate particular strength in operational management practices, including the adoption of modern 'lean manufacturing' techniques, continuous improvement, and comprehensive performance documentation.
• In the US manufacturing sector from 1980 to 2005, firms acquired by private equity experienced productivity growth in the two years following the transaction that was on average two percentage points higher than control firms.
• Approximately 72% of the productivity out-performance in US private equity targets is attributed to more effective management of existing facilities and accelerated reallocation of activity, while 36% is due to the productivity contribution of establishment entry and exit.
• Private equity investors are significantly more likely than comparable firms to shut down underperforming establishments based on labour productivity.
• Private equity transactions in US manufacturing between 1980 and 2005 increased annual output by an estimated US$ 4 billion to US$ 15 billion as of 2007, depending on the rate of productivity gain dissipation.
• In France, leveraged buyouts (LBOs) serve as an engine of growth for small and medium-sized enterprises, leading to significant increases in jobs, productivity, sales, and assets, particularly in industries with insufficient internal capital.
• French LBO targets showed excess growth compared to twins of 13% for jobs, 11% for assets, and 13% for sales between the three years preceding the transaction and the four years following it.
• In France, private equity growth is most pronounced in 'private-to-private' transactions rather than divisional buyouts, suggesting that PE funds alleviate financial constraints for firms that previously lacked access to capital markets.
• Emerging markets accounted for less than 4% of global private equity activity (dollar-weighted) from 1990 to 2008, though this share has grown recently, especially in growth equity.
• For venture capital in emerging markets, the development of local equity markets and the protection of minority shareholder rights are critical factors, likely because they facilitate exits via initial public offerings (IPOs).
• Buyout activity globally is negatively associated with barriers to free trade, corruption, and the complexity of establishing new business entities.
• Private equity deals in wealthier countries, particularly venture capital, are more likely to fail, and deals in 'hotter' markets (following large fundraising periods) are less likely to experience successful exits.
• During periods of financial stress (indicated by high interest rate spreads between AAA and BB corporate bonds), private equity targets show even larger productivity gains due to more aggressive reallocation and closure of unproductive establishments.

APA

World Economic Forum (2009). The Global Economic Impact of Private Equity Report 2009. http://www3.weforum.org/docs/WEF_IV_PrivateEquity_Report_2009.pdf

Chicago

World Economic Forum. The Global Economic Impact of Private Equity Report 2009. 2009. http://www3.weforum.org/docs/WEF_IV_PrivateEquity_Report_2009.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=The Global Economic Impact of Private Equity Report 2009 |date=2009 |url=http://www3.weforum.org/docs/WEF_IV_PrivateEquity_Report_2009.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2009global, author = {{World Economic Forum}}, title = {{The Global Economic Impact of Private Equity Report 2009}}, institution = {World Economic Forum}, year = {2009}, url = {http://www3.weforum.org/docs/WEF_IV_PrivateEquity_Report_2009.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }