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Is Job Insecurity Higher in Leveraged Buyouts?

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  • Nick Bacon
  • Kim Hoque
  • Mike Wright

Abstract

This article assesses whether job insecurity is higher in leveraged buyouts (LBOs) than elsewhere. It draws on matched employer‐employee data from the British 2011 Workplace Employment Relations Study linked to data from the Centre for Management Buyout Research. The analysis finds no consistent evidence of higher job insecurity in LBOs as measured by workforce reduction practices (redundancy rates, job security/no‐compulsory redundancies policies and redundancy consultation), dismissal rates, labour use practices (non‐permanent employment contracts and outsourcing) and employees’ job security perceptions. Job insecurity is no higher in either current or former LBOs than elsewhere. Contrary to what might be expected, it is also no higher in private equity (PE)‐backed LBOs, management buy‐ins or high‐debt LBOs and there is only partial and weak evidence of higher job insecurity in short‐hold LBOs. Job insecurity is also no higher in perfect storm LBOs (PE‐backed management buy‐ins that are short‐holds with high‐debt). Concerns over the negative implications of LBOs for job security thus appear misplaced.

Suggested Citation

  • Nick Bacon & Kim Hoque & Mike Wright, 2019. "Is Job Insecurity Higher in Leveraged Buyouts?," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 479-512, September.
    • Handle: RePEc:bla:brjirl:v:57:y:2019:i:3:p:479-512
    DOI: 10.1111/bjir.12447
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    References listed on IDEAS

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    15. Nick Bacon & Mike Wright & Miguel Meuleman & Louise Scholes, 2012. "The Impact of Private Equity on Management Practices in European Buy-outs: Short-termism, Anglo-Saxon, or Host Country Effects?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51, pages 605-626, April.
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    Cited by:

    1. David Marsden, 2021. "Patterns of organizational ownership and employee well‐being in Britain," British Journal of Industrial Relations, London School of Economics, vol. 59(4), pages 988-1019, December.
    2. Chris Rees & Michael Gold, 2020. "Re‐connecting capitalism: prospects for the regulatory reform of the employee interest in UK takeovers," Industrial Relations Journal, Wiley Blackwell, vol. 51(6), pages 502-516, November.
    3. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.

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