Private Equity Analysis

Evolution of PE Fundraising

(Source: Private Equity Council)

LBO (Leverageed Buy Out) VOLUME: Historical Overview

According to Private Equity Intelligence, PEGS completed 2,238 transactions in 2007

(Source: Private Equity Council)

The impact Private Equity has on the Economy

Private equity plays an important role in American economy and can be credited for driving significant growth in terms of revenues, taxes, and jobs. In 2008, the World Economic Forum (WEC) commissioned the Harvard Business School to conduct a study of 5,000 transactions over a 25 year period. According to the research, the companies in the study on average were losing jobs at existing facilities at a rate one to two percent faster than the competitive companies prior to acquisition. After private equity investment or acquisition, employment rates rose to above the industry average in those same companies by year four under private equity ownership.

A 2008 study by Dr. Robert Shapiro and Dr. Nam D. Pham conducted for the Private Equity Council found that acquisitions by major, U.S.-based private equity firms between 2002 and 2005 resulted in a direct and positive impact on U.S. employment.

The 42 companies studied, had a combined employment of 310,420 at the time of acquisitions. Over a three year period, 26,214 net new jobs were created – an increase of 8.4 percent.

For manufacturing companies, employment increased 1.4 percent, while employment in the overall US manufacturing sector dropped by 7.7 percent during the same period. (Shapiro, Robert and Pham, Nam. “American Jobs and the Impact of Private Equity Transactions,” Private Equity Council, January 2008.)

PE Investment: Deal Value ($Billions)

(Source: Private Equity Council)

Private Equity transactions attributed to $721 billion in total transaction value in 2007. (Source: Private Equity Intelligence)

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