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Cédric Huylebroek
- 8 October 2026
- RESEARCH BULLETIN - No. 147Details
- Abstract
- The impact of private equity buyouts on target firms is well documented, yet empirical evidence on the impact of buyouts across the supply chain remains scarce. We address this gap by using unique production network data to examine how supply chains contribute to the ability of private equity investors to create and extract value. We show that, on average, suppliers of firms backed by private equity outperform their peers because of increased demand for inputs from customers backed by private equity – rather than alternative mechanisms such as knowledge spillovers. In contrast, during economic downturns, while firms backed by private equity outperform their peers even more strongly, their suppliers show no signs of outperformance. This can be attributed to private equity investors exerting greater pressure on suppliers and more actively reconfiguring supply chains to achieve cost-savings for their portfolio companies during periods of economic distress. Finally, beyond their impact on suppliers, we also show that private equity buyouts create crowding-out effects for competitors that rely on common suppliers.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
G34 : Financial Economics→Corporate Finance and Governance→Mergers, Acquisitions, Restructuring, Corporate Governance
- 19 May 2026
- WORKING PAPER SERIES - No. 3234Details
- Abstract
- We study how private equity (PE) buyouts propagate through supply chains using unique firm-to-firm transactions data from Belgium. In normal times, suppliers of PE-backed firms outperform their peers by 5%–10% in employment and sales growth, primarily due to increased input demand from PE-backed customers rather than knowledge spillovers or other mechanisms. In economic downturns, however, this outperformance is attenuated and suppliers compress markups by around 8% as PE investors intensify bargaining pressure and reconfigure supply chains to extract cost savings. Beyond the direct effects on suppliers, we show that as PE-backed firms absorb supplier capacity, they crowd out competitors that rely on the same suppliers. Overall, our findings underscore that supply chains are central to how PE investors create and redistribute value.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
G34 : Financial Economics→Corporate Finance and Governance→Mergers, Acquisitions, Restructuring, Corporate Governance