Buyout staff cuts fail to enhance efficiency

Recent academic research finds that making redundancies upon acquisition by private equity fails to help a company improve profits

Redundancies made during private equity-backed buyouts do not make companies either more productive or more profitable, even three years down the line, a new study has found.

Companies acquired by buyout firms, not including management buyouts, saw their headcount drop by 2-3% in the first year under ownership, according to a paper by Marc Goergen, a chair in finance at Cardiff University and Noel O'Sullivan and Geoffrey Wood, professors at the University of Sheffield.

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