Private equity improves employee relations

Private equity investment in companies often has a positive impact on employee relations according to a study from the Centre for Management Buyout Research (CMBOR) in association with the European Venture Capital Association (EVCA).

The researchers assessed the quality of employee relations using a range of measures, including changes to real earnings, occupational pension schemes, employee consultative committees and trade union relations, and revealed that across these criteria private equity involvement either made no difference to existing relations or had a positive effect.

Private equity investment was found to have the most positive effect on employee relations in traditionally liberal market economies, such as the UK. In those European economies with wide-ranging regulatory frameworks, the effect of private equity investment on employee relations was neutral.

The report showed that the number of companies with a unionised workforce is static post-buyout at 71%. Real earnings of non-managerial employees increased in just over half (51%) of cases. A large minority of 47% experienced no change.

Availability of occupational pension schemes increased from 76% of companies before a buyout to 81% afterwards. The amount spent on non-managerial employee training increased post-buyout in 45% of cases, and fell in just 3%.

Employee commitment best practice increases, with regular team briefings up from 71% to 90%. The proportion of private equity-backed companies that had a consultative committee in place increased from half before the buyout to 63% afterwards.