Employee views of leveraged buyout transactions

This paper offers a comprehensive view of employee satisfaction: we make use of 700,000 ratings, in addition to 500,000 written reviews posted by employees of all ranks, in different industries, types of companies, and in companies that underwent different types of ownership changes. Employee satisfaction is lower following a company acquisition; more so when it is a Leveraged Buy-Out (LBO). However, there is significant heterogeneity. Our first key finding is that previous ownership type is the main source of heterogeneity for employee satisfaction. A large decrease is observed for Public-to-Private transactions only. The employee drop in satisfaction in these types of transactions is four times larger than in a traditional M&A. We do not find however any difference between Private-to-Private transactions and regular M&As.We conducted a Latent Dirichlet Allocation analysis on about 500,000 written cons reviews and show that for Public-to-Private transactions, employees complain specifically about layoffs, restructuring and cost cutting as well as about the management team. However, these employees also complain less about the operations or their benefits which were a problem before the transaction.