Does the tenure of Private Equity investmentimprove the performance of European firms?

The paper investigates whether the presence and tenure of Private Equity (PE) investmentin European companies improves their performance. Previous studies documentedthe unambiguous merit of a buyout during the 1980s and 1990s for listedfirms in the US and UK markets. This study analyzes such influences in both listedand unlisted European firms during 2002−2007. Our analysis suggests that shorttermPE investments have, on average, a detrimental effect on firm performance. Theperformance of a firm that has PE backing is lower than that of a firm without PEbacking in the first year of PE investment. Such an effect disappears if PE investmentsremain in the firm for an uninterrupted six-year term....