Belgian study finds private-equity buyouts lift suppliers—until downturns
A study by European Central Bank and KU Leuven researchers, using Belgian firm data, finds suppliers of private-equity-backed companies record about 6% higher sales, 4% higher employment and 6% higher earnings after a buyout. The gains fade during downturns, when suppliers’ markups fall by about 8% as investors press for cost savings and change supplier relationships.
Bottom line — The researchers also link buyouts to weaker performance among competitors that depend on the same suppliers.
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The paper draws on Belgian firm-to-firm transactions and company accounts covering 2002–2021, according to the authors.
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The researchers attribute supplier growth mainly to higher orders from expanding, private-equity-backed customers—not knowledge transfer.
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Pressure in downturns is strongest for suppliers offering standardised inputs or operating in more competitive industries, the study finds.
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Private-equity-backed customers are more likely to end supplier relationships during downturns, according to the paper.
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Suppliers are 4–6 percentage points more likely to end relationships with rivals of their private-equity-backed customers, the authors estimate.