e study the impact of leveraged buyouts in Germany on employees’ wages, employment, and career paths. We contrast different views of buyouts, which see LBOs as facilitators of organizational and technological modernization, or as vehicles for transferring wealth from employees to shareholders. We conduct matched-sample difference-in-differences estimations with more than 147,000 LBO employees and a carefully matched control group. LBOs increase annual income in the short term, but reduce income by about 11% in the long term. White-collar workers and middle management lose most, probably because of organizational streamlining. LBOs in our sample do not foster trends related to technological modernization such as skill-biased technological change or job polarization. We find a strong negative impact of LBOs for older employees, but no support for the notion that shareholders benefit from LBOs by forcing employees to accept lower wages. All human capital impairments are borne by employees who leave the firm and become unemployed or employed in a different industry

Private Equity, Restructuring, Human Capital Risk, LBOs, Wages
Corporate Finance and Governance: General (jel G30), Mergers; Acquisitions; Restructuring; Corporate Governance (jel G34), Human Capital; Skills; Occupational Choice; Labor Productivity (jel J24), Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. (jel J31), Firm Employment Decisions; Promotions (hiring, firing, turnover, part-time, temporary workers, seniority issues) (jel M51)
Journal of Financial Economics
Department of Business Economics

Antoni, M., Maug, E., & Obernberger, S. (2019). Private equity and human capital risk. Journal of Financial Economics, accepted. Retrieved from http://hdl.handle.net/1765/115875