Private equity and venture capital-backed companies created more than a million jobs in Europe over the last five years, according to the results of a survey commissioned by the European Private Equity and Venture Capital Association (EVCA).
The study, performed by the Center for Entrepreneurial and Financial Studies (CEFS) at Germany’s Technische Universität München, found that between 2000 and 2004 the headcount of private equity-backed companies grew by an average annual rate of 2.4 percent, creating a net total of 420,000 new jobs. Around two thirds of buyout-financed companies either increased headcount or kept it stable. Family businesses bought out by private equity firms grew fastest at an average rate of 7 percent per year.
Venture-backed companies created a net total of 630,000 jobs, representing an average annual growth rate of 30.5 percent. Employment at both private equity and venture capital-financed companies grew by an average rate of 5.4 percent, almost eight times the 0.7 percent growth rate of EU-wide employment.
Sir David Cooksey, the chairman of the EVCA, told PEO: “This is a powerful document which tells the story of the contribution venture capital can make towards delivering on the EU’s Lisbon Agenda.” That agenda laid out the European Commission’s target of creating 20 million new jobs in the EU by 2010.
The survey was conceived as a public relations exercise to promote the industry at EU level, and was accelerated following SPD party chairman Franz Müntefering’s remarks comparing private equity firms investing in Germany to “swarms of locusts” in April.
Cooksey said that he hoped that the survey would have an impact on government policies in Europe. “I’d like to see the playing field levelled across Europe for investors in venture capital and private equity,” he said. “The last few years have seen different governments try different approaches in terms of legal and tax structures – I’d like to see the creation of a single European fund structure.”
EVCA are also hoping that the results of the survey can be used to promote greater understanding of the private equity and venture capital industries, and are distributing the results to major media organisations in the UK.