WASHINGTON, DC, May 4, 2010 – Companies backed by private equity investments provide jobs for more than six million Americans, or more than five percent of all private-sector workers, according to a new analysis released today by the Private Equity Council.
The report, the first to quantify the scope and scale of private equity employment in the United States, also found that private equity investment firms channeled more than $1 trillion in new capital into nearly 9,500 U.S. companies during the past 10 years. That amounts to investments of about $120 million per company. More than 2,500 of the private equity-backed businesses in the U.S. – or 30 percent – are manufacturers. Together, they employ at least 1.3 million workers.
The six million jobs total is based on actual employment reports from 3,650 – or 39 percent – of the 9,473 private equity-backed companies headquartered in the United States. Using data sampling and analysis techniques similar to those employed by the U.S. Bureau of Labor Statistics to estimate U.S. employment and payroll, the PEC estimates that the actual number of employees at all U.S. private equity-backed companies – including the companies that did not report employment data – is approximately 10.9 million.
All fifty states benefit from private equity investment. California, the nation’s most populous state, is home to 1,205 private equity backed companies that together employ more than 440,000 people in facilities in California and elsewhere across the country. Even Wyoming, with a population of 540,000, is the headquarters of ten small private equity-backed companies that together employ 180 people in all their facilities.
In releasing the new data, the Private Equity Council launched a new feature on its web site. “Private Equity: State by State.” The interactive map of the United States enables visitors to view state-specific data about the private equity industry by scrolling their cursor over each state. The data includes information about private equity employment, investment and state-based private equity firms and companies.
“This groundbreaking analysis shows that private equity firms – and the companies in which they invest – are critically important to the American economy,” said Private Equity Council President Douglas Lowenstein. “The $1 trillion that private equity firms have invested in American companies in the past 10 years has provided important and direct benefits for millions of Americans.”
Private Equity Council Chairman Mark Tresnowski, general counsel and managing director of Chicago-based Madison Dearborn Partners, said: “What is especially striking about the report, going beyond the numbers, is the diversity of private equity sponsors. There literally are hundreds of private equity firms in the U.S. — small, mid-sized, and large — that make investments in an equally diverse range of companies. The common denominator is private equity’s singular focus on growing and strengthening companies.”
Below are the states that are home to the largest number of private equity-backed companies; the total employment generated by those companies in the state and elsewhere (based on actual employment reports); and the total private equity capital invested in those companies:
• California – 1,205 companies with 439,000 employees; $126 billion invested
• Texas – 960 companies with 553,000 employees; $181 billion invested
• New York – 661 companies with 568,000 employees; $83 billion invested
• Florida – 507 companies with 371,000 employees; $39 billion invested
• Illinois – 477 companies with 353,000 employees; $73 billion invested
• Pennsylvania – 414 companies with 486,000 employees; $55 billion invested
• Ohio – 374 companies with 326,000 employees; $40 billion invested
• Georgia – 347 companies with 175,000 employees; $26 billion invested
• New Jersey – 336 companies with 247,000 employees; $61 billion invested
• Massachusetts – 309 companies with 119,000 employees; $32 billion invested
Smaller states and jurisdictions also benefit from private equity employment. The District of Columbia is home to 29 private equity-backed companies that employ 4,500 workers at facilities in D.C. and elsewhere. In Utah, 97 private equity-backed companies have 24,000 workers on the payroll. In Oklahoma, 96 companies employ 25,000 workers. And in Arkansas, 30 companies based in the state employ a total of 27,000 workers.
The PEC analysis is based on employment and investment data provided by PitchBook, an independent research firm based in Seattle, Washington, that is focused exclusively on the private equity industry. The PitchBook information was supplemented by private company employment data from Hoover’s, Inc. and by proprietary data collected by the Private Equity Council.
To derive the national employment total of 10.9 million, the PEC analyzed employment data reported to PitchBook and Hoover’s by private equity-backed companies based in individual states. The percentage of private equity-backed companies reporting employment data in each state generally ranged from 30 to 50 percent of all PE-backed companies based in the state. In forty-five states and the District of Columbia, the sample size was greater than 25 percent. In 35 states and the District, the sample size was greater than 35 percent. No sampling techniques were used to calculate individual state employment totals, which were based directly on the employment data reported by participating companies.
About the Private Equity Council
The Private Equity Council, based in Washington, DC, is an advocacy, communications and research organization and resource center established to develop, analyze and distribute information about the private equity industry and its contributions to the national and global economy. PEC members are: Apax Partners; Apollo Global Management LLC; Bain Capital Partners; the Blackstone Group; the Carlyle Group; Hellman and Friedman LLC; Kohlberg Kravis Roberts & Co.; Madison Dearborn Partners; Permira; Providence Equity Partners; Silver Lake; and TPG Capital (formerly Texas Pacific Group).
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