Private Equity Can Make Firms More Innovative

Harvard Business Review

And a recent working paper out of the Dusseldorf Institute for Competition Economics ( DICE ), a think tank of sorts, focuses on the latter by exploring whether leveraged buyouts (LBOs) make firms more innovative. PE investors don’t typically invest in firms known for innovation. They looked at changes in patent activity from before the LBO to three years after the deal, and they analyzed this against a control group of comparable firms (similar size, sales, debt, etc.)

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