Sunday, 25 March 2007

Management buy-ins lead to job cuts

Another day, another bit of research about the impact that private equity has. This time it's the Work Foundation. According to The Observer the Work Foundation's report has found that management buy-ins (ie an outside team taking over) lead to cuts in the workforce and leave remaining employees worse off.

This report follows the recent Nottinghamshire study which claimed that private equity could lead to an increase in employment. Though from memory that was looking out management buy-outs (ie the existing company management remain in place and take the company private).

So the argument is getting more nuanced. This is an entirely good thing. It would be a mistake, for example, for the unions to allow themselves to be painted into a corner where they look like they are simply anti private equity. They need to develop an appreciation for distinguishing the good from the bad - both in terms of strategies and investors.

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