Small and Mid-Market Private Equity Drives UK Job Creation

The majority of these also predict that numbers will continue to grow over the next 12 months, according to a survey published by unquote'', the private equity trade magazine, for its annual British Private Equity Awards.

The survey of 75 UK private equity heads found that 77% per cent of them have seen a rise in job creation within their investee companies over the last year, with a further 67% expecting these levels to continue throughout 2013.

This evidence stands in stark contrast to criticisms leveled at the industry for job reduction.

The survey highlights that levels of job creation do vary across the private equity market. Anecdotal evidence suggests that the smaller a fund is, the greater the focus on job creation. Entries for the unquote” Private Equity Awards back this up. In the submissions received for 'exit of the year’, nearly all of the small and mid-market buyout houses demonstrated an increase in employee numbers through their focus on building businesses.

Kimberly Romaine, editor in chief of unquote” comments: 'Private equity has been in the firing line for cutting jobs. However our research highlights with private equity backing, many small and mid-market businesses are achieving substantial growth and as a result play a key role in strengthening the UK economy.

'The very nature of private equity is to raise money and invest in companies that have strong potential for growth. Whereas banks tend to want to invest in “sure things”, private equity firms are willing to take risks on businesses where they believe they can add value. The objective of private equity is to create a company that is stronger, more profitable and more efficient than the company was prior to purchase. Private equity accelerates the pace of acquisitions, as well as organic growth, which in turn acts as a catalyst for job creation. Our research proves this point and these small to mid-market private equity firms should be praised for their contribution'.