Elaine Pak, PhD Candidate, The Wharton School
Abstract: The private equity industry has grown significantly in the past decades, and this explosive growth has generated much interest on the impact of private equity’s footprint on the economy and the labor market. Using career history data from nearly 11 million employees at 16,137 private equity-backed firms from 2000 to 2024, I find that firms controlled by private equity recruit specialized managerial workforce. Post-deal, newly hired senior executives and middle managers are more likely to have previously worked at a private equity-backed firm. Moreover, they are also more likely to have worked at a firm backed by the same private equity owner. I find evidence that some private equity firms facilitate managerial mobility within their portfolio, creating an “internal” network of senior and middle managers that mirrors the way public corporations have traditionally groomed executives internally. Altogether, my results suggest that private equity firms rely on specialized managerial workforce who are familiar with private equity operations and with a specific owner’s playbook.