Apex Investment Partners Case Study

Working Paper | HBS Working Paper Series | 2018

Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad

Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner and Javier Miranda

Ayash and Rastad (2017) express several concerns about our 2014 analysis of private equity buyouts. We welcome their interest in our work but think their criticisms are off the mark. Some of their claims reflect a misunderstanding of the Census Bureau’s Longitudinal Business Database (LBD) and its underlying data inputs. Because the LBD has emerged as a major laboratory for empirical studies in economics and finance, we use this opportunity to reiterate and clarify some of its important features. In a similar spirit, we elaborate on steps taken to develop our large sample of private equity buyouts. We also address Ayash and Rastad’s remarks about the empirical design of our establishment-level analysis, our methods for distinguishing between leveraged buyouts (LBOs) and other private equity transactions, bankruptcy rates among firms acquired in LBOs, their assertion that we undercount large public-to-private LBOs, and other matters.

Keywords: Private Equity; Leveraged Buyouts; Jobs and Positions; Performance Productivity;


Davis, Steven J., John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, and Javier Miranda. "Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad." Harvard Business School Working Paper, No. 18-074, January 2018.  View Details

Drilling Deep to Find the Right Expertise


 A private equity group was evaluating the purchase of an industrial-cleaning company with Fortune 100 customers in the oil, paper, utility, and steel industries. To get comfortable with their investment, our client needed to connect with people who understood:

  • The demand and frequency of cleaning and coating maintenance services
  • How the cleaning firms are selected and by whom
  • Outsourcing trends within the sector
  • The overall competitive landscape

We quickly learned that this information resided far below the executive suites of the target company’s customers, deep within their organization charts. Current and former executives of competitive firms would also be useful.

Target Profile

  • Former C-level executives of competing outsourced service providers
  • Current and former maintenance executives and supervisors at refineries, power generation facilities, and steel mills
  • Personnel from key industry trade organizations

The Search

We went to work locating the real decision makers key to this industry, starting high up and working our way down the chain of command—SVP of operations, senior reliability officer, plant manager, and so on. Apex Leaders was able to put our client in contact with 11 experienced contacts who fit our profiles.

The Results

Through our contacts, our client learned that although cleaning vendors are put on an approved provider list at the corporate level, individual plant and maintenance managers made the ultimate decisions. Personal relationships and safety records were paramount. Price was secondary.

They also learned that their potential customers could not postpone the cleaning services and, as their facilities move towards 100% utilization, might increase their service needs.

Last Word

Given these favorable trends, our client moved forward.

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