Job creation in French PE-backed companies outpaces rest of economy

Published in early December, the report gathered data from a pool of 2,925 businesses within the portfolio of 232 private equity houses in France.

The document compared hires and layoffs within PE-backed businesses in 2014 and found headcount to have increased by 60,913, a 2.6% uptick on the 2013 figure. The opposite trend was observed among businesses in the French private sector as a whole, where 63,400 jobs were slashed last year.

The disparity was mirrored in the 2009-2014 figures, which counted 314,041 new employees among portfolio companies and an aggregate 123,200 job losses among corporates as a whole.

According to the data, PE-backed companies and their counterparts were virtually tied with regards to job creation up until 2011, when PE-backed companies created 137,346 jobs against 115,300 for the rest of the economy. Over the following years, portfolio businesses went on to create more jobs, while the rest of the private sector experienced a sharp drop and started shedding jobs in 2013.

VC's CV
Within the industry, VC-backed companies unsurprisingly outpaced business that underwent a buyout in terms of job creation. During 2014, the former increased headcount by an average of 12.8%, ahead of the 2.1% found in the buyout space.

Also predictably, buyout portfolios fell behind venture with regards to company growth: while the raw turnover increase in 2014 was higher for the former (€1.3bn as opposed to €243m), VC-backed companies registered a collective growth rate of 20% as opposed to buyout portfolios' 0.5%.

Put together, French PE-backed companies registered a 22.5% turnover uptick between 2009 and 2014, double the 10% posted by the overall private sector. 

Healthy workforce
A sector breakdown crowned healthcare, energy and IT as job creation hotspots in 2014. Medical and biotech assets expanded their workforces by 8.6% (10,567 new hires), followed by energy's 6.9% (625 new hires) and IT's 4.2% (6,100 new hires).

The positive outlook on French PE-backed job creation echoes findings by similar reports in the UK. During the spring, research from NVM Private Equity and the Association of Investment Companies revealed that around 80% of British PE-backed SMEs had expanded their workforce after welcoming private equity investment.

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• Topics
• Performance
• France
• France
• AFIC
• EY (Ernst & Young)