Private Equity at Work

Employment & job creation across Europe

September 2020 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 01

Contents From the CEO

02 Overview This is an industry deeply ingrained in the economic and social fabric of Europe. Our research shows that 22,659 04 The facts 06 The impact companies benefited from private equity investment across 08 About this report the continent in 2018. It is those companies that directly sustain large parts of Europe’s workforce. From the 1.2 10 Employment & job creation million people who work at private equity backed businesses in the Ile-de-France region around Paris to the nearly 12 By type of private equity firm 3.4 million people employed by companies in the business 16 By portfolio company stage 18 By portfolio company sector products and services sector. Eric de Montgolfier Chief Executive Officer 22 By portfolio company geography Private equity is much more than an investor in companies 30 By portfolio company size and a steward of jobs. Active management is at the very 32 A focus on SMEs Private equity is an engine for growth, core of private equity, fuelling innovation and improving and growth is an engine for creating jobs 40 Methodology businesses – and in turn driving economic growth and job 10.5 million across Europe. creation. The portfolio companies of Invest Europe members created 173,124 jobs in 2018 – more than the working 46 About us European employees worked in private equity With our ‘Private Equity at Work’ report, populations of Bilbao or Bonn. That means 5.5% more people backed companies in 2018. 48 About private equity Invest Europe is, for the first time, working at companies that our members back than the 50 About Invest Europe The same number of people as the previous year – five times the European job creation average. 51 Acknowledgements presenting a transparent account of the population in European private equity industry’s record It is worth noting that SMEs added 10% more jobs in Greece 10.7 million on employment. Over time, our data will 2018. These businesses will be critical to Europe’s future competitiveness. Among them are companies leading the expand to create a comprehensive picture Czech Republic 10.6 million drive to create new tech and biotech that will protect the Source: Eurostat of our contribution to jobs and the economy health of citizens and sustain the continent’s economy. that those jobs support. Over time, and with private equity backing, these SMEs have the potential to become multinationals and major employers. ‘Private Equity at Work’ demonstrates that the private equity industry is a cornerstone of the European economy, This potential can be carried forward, even during these responsible for 10.5 million jobs across the continent in most challenging times. People and businesses in Europe 2018 – or 4.5% of the entire active European workforce. are struggling with the unprecedented impact of COVID-19. 4.5% To put that in context, private equity backed companies The economic downturn is leading to job losses and private employ almost the equivalent of the entire population equity backed companies are not immune. However, of the 234 million people in Europe's of Greece, or the number of people who go to work every the industry is continuing to support businesses and the workforce were employed by private equity day in the Netherlands. long-term investors whose money the industry manages. backed companies in 2018. Companies that can emerge from this downturn stronger Source: Eurostat will be able to continue to create jobs, generate returns that support pensioners in retirement, and contribute to the European economic recovery.

Eric de Montgolfier Cover image: Engineers inspect a wind turbine in Sweden Chief Executive Officer 02 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 03

Overview

Private equity and venture capital is present in every region and major business sector across Europe. This is an industry that is woven into the economic and social fabric of Europe, producing the goods and services that people demand – and driving the creation of high-value jobs, prosperity and sustainable growth in the process.

In this section, you can read about the industry's real contribution to employment and job creation, and the far-reaching impact this has on the people, societies and economies of Europe.

In this section 04 The facts 06 The impact 08 About this report 04 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 05 The facts

Employment Employment 2018 Job creation Job creation 2017-18 Private equity is a cornerstone of Private equity builds successful the European economy present businesses. Successful businesses in every region and every major 10.5 million 4.5% invest more in growth. And growth business sector across the continent. European employees worked in private equity of Europe’s total 234 million leads to job creation. +173,124 backed companies in 2018 workforce Net jobs were created by private Source: Eurostat equity backed companies in From technology and life sciences Employment by type of private equity firm Job creation by type of private equity firm 2018, more jobs than the working populations of Bilbao or Bonn start-ups to manufacturing small Buyout firms created the most jobs (105,000) +5% Source: Eurostat and medium-sized enterprises growth rate vs. Venture firms which created 17,000 jobs but at the highest growth rate of +16%. (SMEs) and large consumer-focused See page 14 for full analysis multinationals, private equity and venture capital backed companies support millions of high-value jobs +16% driving prosperity and growth in +17,135 the process. Private equity supports 10.5 million Job creation of +5.5% in private equity backed jobs in Europe, making it a major +5.5% companies in 2018 employer in most industry sectors.

+5% 22,659 +105,272 companies in Europe backed by private equity in 2018 across all Venture Buyout +1.1% industry sectors and all regions See page 14 for full analysis This compares to the overall European market’s 14,500 Buyout backed Growth backed Venture backed Others* +10% job growth of which were SMEs employing jobs jobs jobs of +1.1% 558,984 more new jobs created by SMEs in 2018 874,481 people 7,409,723 2,094,198 419,271 See page 31 for full analysis vs. Note See page 12 for full analysis Note Employment data is based on an extrapolation of a sample Job creation data is based solely on portfolio companies in Europe of 5,788 portfolio companies * Others includes Rescue/Turnaround and Replacement capital active and backed by Invest Europe members in 2017 & 2018 06 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 07 The impact

Private equity isn’t a niche part of the economy, Sector highlights Fuelling innovation it is a cornerstone of the European economy. Private equity invests in innovation and innovation drives the creation of new jobs. Start-ups and SMEs of today will become It touches and supports the daily lives of workers, Energy & the international success stories of tomorrow, employing consumers and savers. It reflects the way we all live, Environment thousands of workers across Europe and beyond.

work and prepare for the future. 254,274 employees Building successful businesses Successful businesses create new jobs. In doing so, +5,048 new jobs Private equity creates successful companies by delivering the they put money in employees’ pockets. Those employees goods and services that consumers and other businesses want. spend their money on goods and services, fuelling +9.3% The money customers spend supports future investment in more business growth. Those businesses become more growth and employment. €328 billion successful, creating even greater numbers of new jobs. invested by private equity in companies Supporting savers located in Europe from 2014 to 2018 Job creation also leads to more savings. New employees Private equity invests money on behalf of pension funds entrust money for their future to pension funds and and insurers. The profits the industry makes from growing Biotech & businesses is shared with pensioners and savers, providing insurers. Those pension funds and insurers commit Healthcare them with the means to support themselves in old age. a portion of that money to private equity. And private 933,631 employees equity ensures that money grows by investing it to €134 billion +28,794 Contributing to society building successful businesses. new jobs committed by pension funds and insurance Private equity backs businesses in cities, towns and local companies to European private equity Employment is the glue that holds economies together. communities across Europe. When turned into success stories, from 2014 to 2018 +9.0% those companies sustain employment directly and indirectly And private equity has an essential role – and a keen in local economies. interest – in ensuring that it sticks.

Information Elevating sustainability standards Communications Private equity focuses on sustainability to make companies Technology (ICT) more valuable over the long term. 1,725,918 employees +38,336 new jobs

This report is the first of its kind, providing detailed +5.3% evidence and analysis of private equity's positive contribution to employment and job creation in Europe. 08 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 09

About this report Sample, universe & methodology

Private Equity at Work aims to replace anecdote and rumour with Employment Employment Job creation Job creation sample size sample size verified facts and data. And broaden isolated examples of employment Employment figures refer to the number of Job creation figures3 were produced using activity at companies into an industry and Europe-wide story. employees at private equity backed companies a sample including only those portfolio 5,788 at the end of 2018. It comprises full-time companies in Europe active and backed by 4,563 portfolio companies portfolio companies Invest Europe members in both 2017 and 2018. This report is based on data collected via the European Data studied equivalents, including only those working full studied Cooperative directly from approximately 300 Invest Europe GP or part-time and who have an employment This sample includes 4,563 portfolio companies status with the company. (3,301 of which were categorised as SMEs in members active across 44 countries in Europe. Our researchers 4,292 2018) backed by 286 Invest Europe members. 3,301 SMEs researched The employment data is drawn from a sample SMEs researched supplemented those figures with information from financial reports, No extrapolation was performed to the European of 5,788 portfolio companies located within (2018 categorisation) universe level for the Job creation figures. Bureau van Dijk and a variety of other sources, including websites Europe (4,292 of which are SMEs). To estimate 36% The data is presented in 'net' form, including and press releases. The data was collected and reviewed by Invest employment at the European level for this of data came from third 36% 1 both job losses and job creation. Europe and PEREP analytics. parties (annual reports, report, we extrapolated the sample to cover of data came from third Bureau van Dijk, other the 22,659 private equity backed portfolio To most accurately represent job creation in parties (annual reports, The research focuses on the number of people employed by private equity public sources) companies considered active in 2018 in 2018, inorganic growth – employment Bureau van Dijk, other public sources) Europe. Three extrapolation scenarios were increases coming from add-on transactions, or and venture capital backed companies in Europe and how many jobs See page 40 for full 2 these companies have created in 2018. The goal is to create as accurate methodology produced. We selected scenario two as being a decreases coming from carve-out transactions See page 40 for full conservative enough, sensible and reasonable – was disregarded4. Further, we conducted methodology a picture as possible of private equity’s role as an employer and job approach to fairly estimate employment extensive auditing which resulted in the creator across Europe. figures at a European level. Figures based addition of 66,391 employees but also removed on that second scenario are the ones shown 60,445 employees from the data, leading to a throughout this report. net addition of 5,946 jobs for our employment growth analysis. As with employment figures, data was reported at year end. The data includes only those who work full or part-time and have an employment status with the company, and excludes jobs as couriers or contractors. 300About Invest Europe GP members surveyed

Notes 1 Through segregation of the known sample into 360 categories based on location of portfolio company, sector, and latest stage of investment. See full methodology for details. 44 2 Involving application of corrected average (excluding maximum employment value in a category from calculated average if Countries value represents more than 50% of the corresponding category total) of known sample (once segregated into 360 categories) to unknown European universe portfolio companies. See full methodology for explanation of all scenarios. Members active between 3 Please see full methodology for complete explanation. 4 As a result an increase of 73,531 jobs from 2017-2018 was excluded from the analysis. 2017– 2018 10 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 11

Employment & job creation

Most people come into contact with a product or service from a company backed by private equity every single day. From food and clothing to apps and computer software, private equity is more ingrained in the European economy than people tend to realise.

All those goods and services are the direct result of investment by private equity in companies, and hard work by people employed by those companies. Private equity’s contribution to the European economy is a story of supporting innovation, growth and job creation.

In this section, you can read about private equity’s role in employment around Europe, its performance across different business sectors and stages of company development.

In this section 12 By type of private equity firm 16 By portfolio company stage 18 By portfolio company sector 22 By portfolio company geography 30 By portfolio company size 32 A focus on SMEs 12 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 13

Employment & job creation By type of private equity firm

How many people do private Employment Total European employees working In 2018 Private Equity and Venture Capital equity backed businesses employ? firms employed more staff (10.5 million) than in private equity backed companies 2018 Important note the total number of people working in the In this analysis, the By type of firm Venture, Growth, Private equity firms investing in companies around entire finance and insurance sector across Generalist and Buyout Europe employed nearly 10.5 million people. That’s 4.5% Europe (6.9 million). categories refer to the type of private of the continent’s entire active workforce* or to look at it equity firm. In the next Buyout employment another way, more than the entire population of Sweden. analysis, the categories Buyout firms supported5.5 million jobs at Venture, Growth and more than 4,250 companies in Europe. Buyout refer to the Our study found that over 22,659 companies across portfolio company In other words, over over half of all jobs Europe are backed or owned by private equity, and 5,472,259 stage. Although the supported by the private equity and venture category names are the that employment in the studied companies for job capital industry and more than the working same, the underlying data points are not creation increased by 5.5% in 2018 – this was 5 times population of London. 4,555,967 comparable. greater than the wider market’s growth of 1.1%. Generalist employment Private equity backed businesses span all sectors, Generalist firms backed 10,300 active portfolio from agriculture and biotech to communications, companies, more than twice as many as technology and transportation. Private equity is buyout and growth firms, and supported deeply rooted in every region and every industry in 4.6 million jobs. Europe. It is a cornerstone of the European economy. Venture Capital employment 812,486 * EU27 plus Montenegro, Norway, Serbia, Switzerland and the UK. Venture capital firms supported more than 584,337 812,000 jobs at more than 9,200 mainly SME 450,294 companies in Europe. This is less than 10% of private equity employment, but Venture capital supports more than a third (9,247) Venture Growth Generalist Buyout Other* of the total number of companies backed by the industry. 9,247 1,157 10,294 4,254 334 10.5 million companies companies companies companies companies European employees worked in private equity backed companies in 2018 * Other includes Mezzanine & Rescue/Turnaround Total sums to more than 10.5 million jobs since a company can be backed by multiple firms. 4.5% 22,659 of Europe’s total 234 million Companies in Europe backed by private equity workforce work in private in 2018, across all industry sectors, and all regions. equity backed companies Source: Eurostat 14 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 15

Employment & job creation By type of private equity firm continued

Job creation 2017-18 Job creation Private equity backed companies increased By type of firm employment by 5.5% in 2018. That's significantly higher than the 1.1% job growth achieved by businesses across Europe. +173,124 Venture Jobs created by private equity +16% Out of the 4,563 portfolio companies of our +17,135 study, 1,529 were backed by Venture Capital backed companies based in Europe About as many people passing through Amsterdam firms and they experienced the highest overall Central Station on an average week day in 2017 growth rate: a 16% increase in employment Source: Nederlandse Spoorwegen between 2017 and 2018, representing a net creation of more than 17,000 jobs in 2018.

Growth +6% +2,549 +5% +5% +5% With a relatively small sample of 120 portfolio +42,530 +105,272 +5,637 companies, Growth firms backed the creation of more than 2,500 jobs, representing a 6.1% growth rate.

Generalist Venture Growth Generalist Buyout Other* Typically backing larger companies, Buyout * Other includes Mezzanine & Rescue/Turnaround and Generalist firms are the largest net contributors of total jobs. In 2018, they both increased employment by around 5%, with Generalist firms helping to create more than 42,500 jobs in 2018 across nearly vs. +1.1% 1,800 companies. +5.5% Buyout Job creation in private This compares to the equity backed companies overall European market’s Buyout firms delivered the highest total net in 2018 job growth of +1.1% in 2018 increase in employment in the companies Source: Eurostat they back, supporting the creation of more than 105,000 jobs in almost 1,100 portfolio companies in our sample.

Important note In this analysis, the Venture, Growth, Generalist and Buyout categories refer to the type of private equity firm. In the next analysis, the categories Venture, Growth and Buyout refer to the portfolio company stage. Although the category names are the same, the underlying data points are not comparable. 16 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 17

Employment & job creation By portfolio company stage 5

How does private equity support Buyout stage portfolio companies Employment 2018 Job creation 2017-18 jobs at different stages of a We studied employment at 5,233 portfolio Important note companies at the Buyout stage of investment, By portfolio company stage By latest investment stage In this analysis, the portfolio company’s growth? which is 23% of the total number of European Venture, Growth and Buyout categories Private equity invests in businesses companies backed by private equity. refer to the portfolio of all different shapes and sizes, from These businesses employed more than company stage. In the 7.4 million staff, which is 71% of all jobs 8m previous analysis, the the smallest seeds of an idea to the supported by private equity in Europe. 7,409,723 categories Venture, Growth, Generalist and largest multinational corporations. +15% Buyout refer to the 6m +12,502 type of private equity Employment Job creation firm. Although the category names are the Private equity not only selects the companies Overall the job creation trends by portfolio same, the underlying most likely to grow and succeed, but also company stage broadly follows the same 4m +9% data points are not gives them the investment, support, business pattern seen by the previous analysis by type +43,568 comparable. contacts and tools they need to achieve of PE firm – companies at the venture stage their full potential at all stages This active experienced a higher employment growth rate 2m 2,094,198 +5% +112,633 558,984 +3% investment management by private equity than the later stage companies in the sample. 419,271 +4,422 firms supercharges job creation as the Venture stage portfolio companies portfolio company grows. Venture Growth Buyout Other* Venture Growth Buyout Other* Seed, start-ups and later stage venture Venture stage portfolio companies companies (almost exclusively SMEs by size), 1,662 1,151 1,428 322 companies companies companies companies million There were almost 10,000 venture capital experienced the highest level of growth. 7.4 Number of portfolio companies in sample People employed backed portfolio companies in Europe in 2018. Between 2017 and 2018, these 1,662 venture by private equity employing nearly 420,000 staff. That’s 44% stage portfolio companies created more backed companies that are at a Buyout of all companies backed by private equity, than 12,500 jobs, accounting for a 15.5% investment stage and 4% of the private equity backed workforce job creation rate. 12.2% in Europe. Growth stage portfolio companies Growth stage portfolio companies Growth companies experienced a 8.5% job There were 4,734 portfolio companies in creation rate, creating more than 43,500 Venture a Growth stage backed by private equity, new jobs, 25% of the total jobs created by 23.1% 43.8% with a total of 2.1 million employees. private equity. +15% That’s 21% of all companies backed by private Buyout stage portfolio companies +12,502 new jobs equity in Europe and 20% of the overall Private equity backed workforce. Portfolio companies in a Buyout investment stage created a total of 112,633 new jobs, a 4.7% job creation rate, and representing 65% of the total new jobs created by private 20.9% equity across Europe.

Venture Growth Buyout Other* Note 9,931 4,734 5,233 2,761 5 According to the latest investment stage into the Note portfolio company * Other includes Rescue/Turnaround and Replacement capital 18 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 19

Employment & job creation By portfolio company sector

How does private equity support Employment Private equity backed company jobs across industry sectors? Private equity backed companies in the Business Products & Services sector employ employment 2018 When companies with growth about 3.4 million people, which is 32% of total By sector potential need investment and private equity backed European employment. expertise to enable them to expand This is closely followed by private equity backed Number of Number of Number of Number of or develop, private equity is almost Consumer Goods & Services companies, companies employees companies employees employing 2.9 million people (28%), and Business Products always on hand. That’s why private 4,315 3,362,728 Construction 497 259,449 Information Communications Technology & Services equity is found investing in every (ICT) which employs 1.7 million people or 16%. Consumer Goods major industry and business sector 4,237 2,899,606 Energy & Environment 1,073 254,274 Our research shows that companies backed & Services across Europe. by private equity in these three sectors Information Communications employed around 8 million people in 2018, 7,244 1,725,918 Chemicals & Materials 429 216,649 In addition to financial backing, Technology (ICT) across 15,800 companies in Europe. private equity helps its portfolio Biotech & Healthcare 2,876 933,631 Agriculture 204 104,654 It‘s worth also underlining that private companies to improve operations, equity backed companies in the Biotech Financial & Insurance upgrade their offer, boost sales and Healthcare sector employed more than Top 3 sectors for 805 301,099 Real Estate 217 101,146 European private Activities and drive profits – all of which fuel 900,000 people. equity backed company growth and job creation. employment Transport 387 295,529 Other 375 27,494 Business Products Our study shows that three & Services industry sectors represent nearly 32% 75% of all private equity backed 3,362,728 employees employment in Europe. 4,315 companies Energy & Environment 1,073 companies Consumer Goods & Services 254,274 Biotech & 28% Healthcare employees 2,876 companies 2,899,606 employees 4,237 companies 933,631 employees Information Communications Technology (ICT) 16% 1,725,918 employees 7,244 companies 20 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 21

Employment & job creation By portfolio company sector continued

Job creation Net job creation Information Private equity backed Communications In every sector, private equity firms added new Most jobs created in the sectors that on Technology (ICT) Important note jobs in 2018, and in some sectors private equity average saw highest net job creation per job creation 2017-18 +38,336 In this analysis, we job creation far outstripped the European company were in Consumer Goods & Services, excluded sectors for New jobs by portfolio company sector +5.3% which the number of average. Whatever the company, whatever Business Products and Services, and Biotech portfolio companies was the sector, private equity’s focus remains the and Healthcare, resulting in a total net job not statistically relevant same – making a stronger, more profitable creation of almost 100,000 jobs in 2018. (under 100 companies): and more successful business. Agriculture, Chemicals Information Communications Technology (ICT) and Materials, Real Estate And, as a result, those businesses invariably and Transportation. One other sector of significant note is ICT. +9.0% need more employees. In our job creation research of 4,563 portfolio Across all sectors, private equity’s companies, about 1,500 are in ICT and these Financial & Insurance job creation rate of 5.5% significantly have added more than 38,000 jobs between +5,951 outperforms the 1.1% average in the wider 2017-2018. Biotech European market (Source: Eurostat). & Healthcare It is also interesting to note that the +28,794 Consumer Goods European average job creation rate in the & Services +35,577 Financial & Insurance sector is just 1.0%, Top 3 sectors for compared to 7.4% growth in companies European private +7.4% equity backed +4.9% backed by private equity in this sector. job creation

Energy & Environment +9.3% +5,048 new jobs

Construction +3,253 Biotech & Energy & Environment Healthcare +5,048 +9.0% +2.8% +28,794 new jobs

Financial +9.3% & Insurance Business Products +7.4% & Services +5,951 new jobs +4.0% +35,322 22 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 23

Employment & job creation

By portfolio company geography +20,162

European job creation 2017-18

Central & Eastern Europe Baltics +6.5% Bulgaria -4.3% Czech Republic +6.6% +30,438 Hungary +10.8% Poland + 17.8% 10.5 million Romania +14.4% European employees worked in private Ukraine +1.1% equity backed companies in 2018 Other CEE* +1.9%

DACH +30,366 Austria +3.1% Germany +4.5% Switzerland +3.8% +173,124 +56,258 new jobs created in European private equity backed companies in 2017–18 +12,796 France & Benelux Belgium +4.4% France +5.0% Luxembourg +6.5% Netherlands +4.4%

Nordics +23,105 Denmark +2.3% Finland +13.8% Norway +5.9% Sweden +11.2%

Central & Eastern Southern Europe Region Southern Europe UK & Ireland France & Benelux DACH Nordics Europe Greece +1.9% Private equity job growth +4.8% +6.4% +4.9% +4.4% +8.6% +10.7% Italy +10.1% 173,124 total new private 23,105 new private equity 30,438 new private equity 56,258 new private equity 30,366 new private equity 20,162 new private equity 12,796 new private equity Portugal +12.2% equity backed jobs backed jobs backed jobs backed jobs backed jobs backed jobs backed jobs Spain +2.1%

+1.6% +1.2% +1.3% +0.5% +1.7% +0.7% Average market job growth Average market growth Average market growth Average market growth Average market growth Average market growth Average market growth UK & Ireland 1,424,192 2,439,863 3,891,798 1,691,978 717,886 316,459 Ireland +23.2% Private equity employment Private equity employment Private equity employment Private equity employment Private equity employment Private equity employment Private equity employment United Kingdom +6.1% 50,088,100 33,292,000 40,207,400 49,366,200 12,701,700 32,013,300 Note Total employment (Source: Eurostat) Total employment Total employment Total employment Total employment Total employment Total employment *This analysis excludes Other Europe countries 24 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 25

Employment & job creation By portfolio company geography continued

How does private equity support Top regional employment 2018 jobs across regional areas? By region and sub-region Wherever companies have potential, private equity can help France & Benelux UK & Ireland DACH supercharge their growth. As our 4 North Rhine -Westphalia 5 4 research shows, private equity 37% 23% 16% 459,880 3.9 million 2.4 million 5 1.7 million Île-de-France 1 1 fuels expansion and employment 1,201,906 in large, developed metropolitan 4 5 3 2 areas, and in emerging cities and 2 3 London 1 regions alike. 3 664,514 2

Employment 1. Île-de-France 1,201,906 1. London 664,514 1. North Rhine-Westphalia 459,880 France & Benelux was the largest region for private equity backed jobs. With 3.9 million 2. Rhône-Alpes 279,877 2. South East 288,074 2. Bavaria 269,88 1 people employed, the region accounts for over 3. Provence-Alpes-Côte d’Azur 257,1 8 3 3. West Midlands 271,029 3. Baden-Württemberg 203,580 one-third of all private equity backed jobs and 4. North Holland 211,377 4. North West 258,653 4. Berlin 113,866 portfolio companies in Europe. 5. Nord-Pas-de-Calais 189,786 5. Scotland 169,778 5. Hessen 91,927 The Île-de-France region accounts for over 1.2 million private equity backed jobs, making it almost twice the size of London and over ten times larger than Berlin. Southern Europe Nordics CEE With more than 2.4 million people employed by private equity backed companies, the UK & Ireland was the second most important 14% 7% 3% Mazowieckie 1.4 million 2 700,000 300,000 1 4 Stockholm 38,109 region. The region accounts for 20% of 134,313 1 5 2 5 European portfolio companies and 23% of 1 1 3 3 private equity backed European jobs. 4 4 Community 5 2 The DACH region follows with almost of Madrid 349,290 3 1.7 million jobs, representing 16% of the total.

1. Community of Madrid 349,290 1. Stockholm 134,313 1. Mazowieckie 38,109

2. Lombardy 180,326 2. Uusimaa 96,210 2. Muntenia 32,013

3. Catalonia 124,377 3. Capital Region of Denmark 65,832 3. Central Hungary 24,909

4. Piedmont 100,962 4. Oslo 62,968 4. Transylvania 20,914

5. Emilia-Romagna 92,072 5. Västra Götaland 30,589 5. Prague 16,558 26 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 27

Employment & job creation By portfolio company geography continued

Job creation Top regional job creation 2017-18 Private equity supports job creation in all areas of Europe. This analysis identifies Europe’s job By region and sub-region creation hotspots, where private equity backed companies achieved the most growth. CEE Riga 1 Nordics UK & Ireland +44% By location of portfolio companies, the CEE was the top region with a growth rate of 10.7% +10.7% 4 +8.6% +6.4% in 2018. This was followed by the Nordics +12,796 2 +20,162 Uppsala 3 +30,438 +39% 5 with 8.6%. 2 3 1 2 Portfolio companies in the UK and Ireland 5 5 3 1 4 saw the highest net job creation per company, East Midlands 4 +27% followed by the CEE region and Southern Europe.

This analysis reveals that private equity 1. Riga +44% 1. Uppsala +39% 1. East Midlands +27%

support is driving rapid job creation growth at 2. Mazowieckie +32% 2. Varsinais-Suomi +24% 2. Leinster +14% businesses across Europe, with some regions 3. Bratislava +30% 3. North Ostrobothnia +23% 3. Wales +12% increasing employment by up to 40-50%, 4. Pomorskie +27% 4. Central Region of Denmark +19% 4. East of England +12% notably in Riga and Brandenburg. 5. Transylvania +15% 5. Stockholm +14% 5. Yorkshire and The Humber + 11%

France & Benelux Southern Europe DACH Brandenburg +46% +5.5% +4.9% 3 +4.8% +4.4% 4 1 4 2 Job creation for all regions in 2018. +56,258 4 +23,105 +30,366 2 3 1 2 This compares to the overall 5 European market’s job growth of 1 1 Poitou-Charentes +33% Aragon +32% +1.1% 5 5 3 Source: Eurostat

1. Poitou-Charentes +33% 1. Aragon +32% 1. Brandenburg +46%

2. Centre-Val de Loire +20% 2. Lazio +20% 2. Thuringia +21%

3. Brussels Capital Region +18% 3. Chartered Community of Navarre +16% 3. Espace Mittelland +16%

4. Picardy +14% 4. Friuli-Venezia Giulia +15% 4. Saxony-Anhalt +14%

5. Aquitaine +12% 5. Porto and North + 14% 5. Northwestern Switzerland +14%

Note The analysis excludes sub-regions with less than 100 companies. 28 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 29

Employment & job creation – cross border By investment firm and portfolio company geography

In the below graphic, we proportionally display cross border employment by location of private equity firms and portfolio companies. This demonstrates the jobs backed by private equity in a specific region, domestically and abroad.

France & Benelux UK & Ireland DACH France & Benelux Private equity firms backed Private equity firms backed Private equity firms backed 67,432 jobs 6.8% 995,117 jobs 3,919,461 jobs 3,726,270 jobs Of which: Of which: Of which:

UK&I SE 45,198 35,027 DACH 4.5% 3.5%

808,362 domestic jobs Nordics CEE 81.2% 24,292 14,806 2.4% 1.5%

Southern Europe UK & Ireland Private equity ﬁrms backed 71,056 jobs 8.4% Nordics UK & Ireland 0.2% 843,399 jobs 2,100 2,037,423 Of which: CEE 1.0% domestic jobs 8,377 54.7% F&B 1.1% DACH F&B 9,573 DACH France & Benelux 21,534 9,573 Southern Europe 2.6% 1.1% 620,526 jobs 405,693 jobs 16.7% 10.9% 730,760 domestic jobs CEE Nordics Poland 86.6% 0% -6 8,377 2,100 1.0% 0.2%

Nordics Nordics DACH 62,672 jobs Private equity ﬁrms backed 538,444 domestic jobs 9.3% France & Benelux 673,929 jobs 79.9% 3,362,079 domestic jobs Of which: UK&I F&B 85.8% 31,431 30,025 Southern Europe 4.7% 4.5%

439,645 jobs Nordics CEE CEE SE Southern Europe UK & Ireland DACH Nordics 6,734 4,622 11.8% 90,293 jobs 12,118 jobs 1.0% 0.7% jobs jobs jobs 132,692 2.4% 197,844 192,121 148,576 0.3% 3.6% 5.0% 4.9% 3.8% CEE CEE Private equity ﬁrms backed 174,259 domestic jobs CEE 186,042 jobs 93.7% 6,723 Of which: 0.2%

CEE – Central & Eastern Europe Southern Europe DACH Nordics France & Benelux UK & Ireland F&B – France & Benelux 4,839 jobs 4,049 jobs 1,087 jobs 983 jobs 826 jobs UK&I – UK & Ireland 2.6% 2.2% 0.6% 0.5% 0.4% 30 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 31

Employment & job creation By portfolio company size

How is employment and job Employment 2018 Job creation Job creation 2017-18 creation affected by company size? SMEs experienced the highest employment By portfolio company size growth rate between 2017-2018 (+10%), creating By portfolio company size

In general, smaller companies more than 18,000 jobs. +18,231 achieve faster growth. But although In absolute numbers, the very large (with 1,000 10.0% larger companies grow at slower to 4,999 employees), and largest (with +5,000 +11,185 +17,092 5,145,389 employees) companies created the most jobs: rates, the number of net jobs they 8.5% +63,568 +63,568 and +63,048 jobs respectively. 8.3% create are far greater. 5000k 7.3% Of course job creation isn’t only about size. It also requires the right 4000k +63,048 product or service for the market, 3.6% scalability, skilled management 3000k and suitable investment. 2,020,369 +10% Employment more new jobs created by SMEs in 2018 2000k 1,524,991 Private equity specialises in active 0 – 250 251 – 499 500 – 999 1,000 – 4,999 5,000+ portfolio management, enabling companies 874,481 916,946 By portfolio company size (employee bracket) to grow and create jobs, whatever their size. 1000k Once a portfolio company’s market and growth potential are identified, private equity provides ‘Graduation’ to higher By portfolio companies that moved to higher employment size category the support and investment to drive growth. size category 0–250 251–4 99 500–999 1,000–4,900 5,000+ When private equity, together with management teams and entrepreneurs get this right, By portfolio company size (employee bracket) We estimate that overall, 11% of portfolio companies of all sizes increase employment. companies ‘graduated’ to a higher category +25% of number of employees, between 2017 and 2018. +22%

A large proportion of SMEs in our sample +16% 11% saw year-on-year growth and job creation, +15% 1.8 million 8.7 million fuelled by investment and management 874,481 Employees in 2018 Employees in 2018 support from their private equity backers. working in PE backed working in PE backed +11% people were employed in roughly companies with companies with The highest growth rate was seen in the <500 employees. >500 employees. 200-250 employee category, with 25% of +7% 14,500 17% of all PE backed 83% of all PE backed these companies moving up to a higher SME companies backed by jobs, in 77% of portfolio jobs, in 23% of portfolio size category in 2018. private equity in 2018 companies. companies. +2%

0–49 50–99 100–199 200-250 251–499 500–999 1000–4999

By portfolio company size (employee bracket) 32 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 33

A focus on SMEs By portfolio company size

What is private equity’s role in SME employment 2018 Job creation SME job creation 2017-18 supporting SME employment? Private equity is a major driver of business By company size and job creation among European SMEs. By company size SMEs are the backbone of the Many companies depend on investment and support to realise their growth potential, European economy. Its growth 278,883 +12% 278,883 and they achieve it faster with private equity 10k +9,217 engine. Most small companies aspire 32% 300k backing. to grow and private equity helps 300k 234,802 27% When analysing the job creation rates revealed them graduate to the next level. 8k 196,077 by this research, it should always be compared 22% Ambitious local businesses with a 164,719 to average market growth rates. handful of staff and a bright idea can 200k 19% 6k In Europe in 2018, the average job creation +10% +10% become multinational corporations rate was 1.1%, and the employment growth +3,663 +3,825 employing thousands. Private equity rates supported by private equity outstrip 4k can identify the best and help them 100k this by every measure (Source: Eurostat). +5% +1,525 achieve their ambitions. 2k Job creation by company size

Employment SMEs employing from 100-199 people saw the largest growth in employment over There are 1,835 companies in the 100-199 0 – 49 50 – 99 100 – 199 200 – 250 0 – 49 50 – 99 100 – 199 200 – 250 the year, at 12%, with a 9,217 net increase employees size category, which is 13% of all in employees. SMEs backed by private equity. This group Key to employment by company size Key to employee growth by company size contributes the most to total SME employment Key to employment by company size The 50-99 and 200-250 company size with 278,883 employees, or 32% of total SME categories both saw an increase in jobs of 10%, 0—49 234,802 employees 50—99 196,077 employees 0—49 +1,525 employees 50—99 +3,663 employees employment. adding 3,663 and 3,825 jobs respectively.

8,964 SME companies are in the 0-49 size Interestingly, the category of the smallest category, which is 62% of all SMEs backed by 27% 22% companies with 0-49 employees saw the +5% +10% 8,964 portfolio companies 2,988 portfolio companies private equity, and they employ 234,802 people, smallest job creation – just 5%, with 1,525 100—199 +9,217 employees 200—250 +3,825 employees which is 27% of the total employed. new jobs created. 100—199 278,883 employees 200—250 164,719 employees 32% 19% +12% +10% 1,835 portfolio companies 707 portfolio companies

874,481 14,500 72% +18,231 Important note people were employed in roughly SME companies backed by of the studied sample were SMEs new jobs created in European SMEs are categorised private equity in 2018 private equity backed SME as companies with companies in 2017 – 18 up to 250 employees. 34 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 35

A focus on SMEs By portfolio company geography +1,959 SME employment +18,231 & job creation new jobs created in European private equity backed SME by geography +2,701 companies in 2017 – 18 in 2018

By geographic location of portfolio companies The top 3 countries which saw the largest increases in number

+3,727 of employees within the SME universe +8,031 in 2017-2018 were:

+251 +28% Hungary +1,563 +27% Austria

Central & Eastern Region Southern Europe UK & Ireland France & Benelux DACH Nordics Europe +21% Luxembourg SME job creation +10% +14% +9% +12% +9% +3% 18,231 total new private 1,563 new private equity 2,701 new private equity 8,031 new private equity 3,727 new private equity 1,959 new private equity 251 new private equity equity backed SME jobs backed SME jobs backed SME jobs backed SME jobs backed SME jobs backed SME jobs backed SME jobs 80,059 128,665 410,678 136,666 85,812 32,601 Private equity backed SME employment PE SME employment PE SME employment PE SME employment PE SME employment PE SME employment PE SME employment 9.2% 14.7% 46.9% 15.6% 9.8% 3.7% Percentage of total SME employment of total SME employment of total SME employment of total SME employment of total SME employment of total SME employment of total SME employment 36 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 37

A focus on SMEs By portfolio company geography continued

SME employment by geography SME employment in 2018 SME job creation by geography SME job creation in 2017-18 As early stage investors in innovative, start-up By region, and top five sub-regions With the right support and investment SMEs By region, and top five sub-regions and seed stage companies, private equity plays can grow fast, and create jobs fast. As we see an important role in SMEs. CEE DACH from the data in our study, the fastest growing CEE 3 DACH 3 3 5 4 4% 16% 1 areas are seeing rises in private equity backed +3% 4 +12% 32,601 136,666 4 +251 +3,727 2 SME employment by region 5 2 5 jobs of up to 65%. 1 2 Companies based in France & Benelux were 1 3 2 5 4 1 Overall employment in private equity backed the largest group of private equity backed SME companies increased 18,231 (10%) SME employers in Europe, with a total of 1. Central Hungary 4,209 1. Berlin 29,283 from 2017-18. 1. Bratislava +30% 1. Vienna +35% 410,678 employees in 2018. 2. Mazowieckie 2,896 2. Baden-Württemberg 26,341 2. Central Hungary +28% 2. Thuringia +21% SME job creation by region 3. Riga 2,325 3. Bavaria 17,242 3. Tallin +19% 3. Schleswig-Holstein +19% The top three regions for job creation in 4. Dainava 1,518 4. North Rhine-Westphalia 11,472 4. Dainava* +12% 4. Bavaria +18% 2018 were UK&Ireland (+14% ), DACH (+12% ) 5. Malopolskie 1,489 5. Hamburg 5,379 and Southern Europe (+10%). 5. Highlands* +10% 5. Baden-Württemberg +18%

2 France & Benelux 5 Nordics France & Benelux 4 Nordics 4 3 47% 10% +9% 1 +9% 1 5 410,678 85,812 +8,031 +1,959 3 4 2 2 1 5 1 1 3 4 2 3 5 SME employment by top sub-region SME job creation by top growth per sub-region 1. Île-de-France 123,655 1. Stockholm 14,711 1. Brussels Capital Region +28% 1. Uppsala +50% SMEs backed by private equity in European Many private equity backed SMEs in European sub-regions (areas within countries) were 2. Rhône-Alpes 31,787 2. Uusimaa 13,500 sub-regions (areas within countries) grew 2. North Holland +21% 2. Central Region of Denmark +42% significant employers in 2018. 3. Provence-Alpes-Côte d’Azur 30,581 3. Capital Region of Denmark 7,006 employment at significant rates in 2017-18. 3. South Holland +19% 3. Pirkanmaa +29%

4. Flemish Region 19,523 4. Västra Götaland 5,424 4. Utrecht +15% 4. Varsinais-Suomi +26%

5. North Holland 15,022 5. Oslo 5,134 5. Alsace +15% 5. Zealand +25% Île-de-France Emilia-Romagna

123,655 Southern Europe UK & Ireland +64% Southern Europe UK & Ireland 9% 4 15% +10% 5 +14% employees job creation 80,059 3 128,665 4 +1,563 1 +2,701 2 2 1 3 5 3 4 4 3 5 2 1 2 1 5

1. Catalonia 12,380 1. London 46,228 1. Emilia-Romagna +64% 1. South West +28% London Uppsala 2. Community of Madrid 9,087 2. South East 10,922 2. Catalonia +22% 2. East of England +27% 46,228 3. Basque Country 6,230 3. Leinster 9,314 +50% 3. Community of Madrid +14% 3. North West +26% employees 4. Lombardy 5,979 4. Scotland 7,532 job creation 4. Aragon +14% 4. Leinster +24%

5. Lisbon 4,253 5. North East 7,518 5. Lombardy +10% 5. London +19%

Note Analysis excludes those sub-regions with less than 5 companies and less than 100 employees in 2017. *Sub-regions exceptionally analysed with less than 5 companies 38 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 39

A focus on SMEs By portfolio company sector

SME employment by company sector SME employment 2018 SME job creation by company sector Top SME job creation sectors Private equity is a natural partner for companies When the right investment partner gets With 14% growth in employment, Information driven by innovation, R&D or technology. By portfolio company sector Top SME sectors for Important note involved with the right company, chemistry Communications Technology (ICT) remains the European private In this analysis, we happens. largest and most important sector for private With private equity investment and expertise, equity backed excluded sectors for equity backed SME jobs. companies can get to market quicker or expand employment which the number of Private equity firms bring together experience portfolio companies was market share more rapidly. These are crucial from entrepreneurs, management consultants SMEs in the Business Products & Services Information not statistically relevant factors for business success and job creation. and financial experts to really drive growth sector created 3,209 jobs in 2018, the second Communications (under 100 occurrences): Technology (ICT) Agriculture, Chemicals & at the companies they back. The result can be highest net job increase after ICT. Key SME employment sectors Materials, Construction, job creation that far outpaces the averages for Financial & Insurance Other sectors seeing significant increases Information Communications Technology 39% companies and sectors across Europe. Activities, Real Estate in SME jobs are Biotech and Healthcare (+9%) (ICT) was a key sector for European SME jobs 345,287 employees and Transportation. and Energy & Environment (+12%). in 2018, accounting for 39% of all private equity 5,831 companies backed SME employment in Europe. Business Products Business products & Services and Consumer & Services SME job creation 2017-18 goods & Services were also important By portfolio company sector sectors, representing 13% and 18% of SME 13% employment respectively. 110,811 employees 1,981 companies Biotech & Additionally Biotech & Healthcare represent Healthcare a significant proportion of private equity +1,989 new backed SME jobs, SME jobs created SME employment 2018 +9% By portfolio company sector Business Products & Services Number of Number of +3,209 new employees % employees % SME jobs created Information Financial & Information Communications 345,287 39% Insurance 34,488 4% Communications Technology (ICT) Activities Technology (ICT) +8,419 new Consumer Goods Chemicals 160,216 18% 14,465 2% SME jobs created & Services & Materials

Business Products & 110,811 13% Transportation 13,126 2% +8% Services

Biotech & Consumer Goods 82,496 9% Other 12,998 1% Energy & +14% Healthcare Environment & Services +702 new SME +2,152 new Energy & jobs created SME jobs created 44,686 5% Agriculture 8,933 1% Environment +12% +6% Construction 40,774 5% Real Estate 6,202 1% 40 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 41

Methodology

The aim of this report is to provide objective, evidence-based research and analysis on the vital role of private equity in employment and job creation across Europe.

This report is based on data collected from approximately 300 Invest Europe GP members, and their many thousands of portfolio companies which are active across 44 countries in Europe.

This section details the methodology and data which were studied and used to draw the conclusions in this report. 42 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 43

Methodology

Data collection & audit Definition of the universes

2 The analysis Definition of portfolio companies to be included In addition, growth of 73,531 jobs due to the add-on Employment universe Job creation universe With exclusion only considers The universe of portfolio companies to be effect was excluded. The main audit processes the The Employment universe is established The Job creation universe is a sub-section of the of outlier data and employees who with consideration included was defined as follows. data were subjected to were the following. to show total employment within included full universe that was used to produce statistics have an employment of different case portfolio companies at a specific time: on changes in employment levels within included status with the Criteria for inclusion and exclusion Add-on effect scenarios. company, excluding as of end of 2018. portfolio companies from 2017 to 2018. 1 When considering growth of employment self-employed workers –– Only data of portfolio companies with European and contractors. headquarters were collected. from 2017-2018, any change due to mergers & Definition of employment universe Definition of job creation universe acquisitions were excluded. Whilst some of this The calculation of –– Only companies active during 2018 within a effect was excluded prior to auditing, on audit an job growth excludes portfolio company backed by an Invest Europe (n = 5,788) = B + C + D + E – A (n = 4,563) = B + C + D – A – E 3 any add-ons to member had data collected (i.e. companies exited inorganic growth of 73,531 jobs from 2017-2018 Companies active in portfolio company Companies active in portfolio company of companies such was further excluded from the analysis. within 2017 or backed post-2018 were excluded). of an Invest Europe member during 2018 an Invest Europe member in both 2017 & 2018 as those resulting Review of different employment figures from (i.e. excludes backed companies that (i.e. companies exited during or before end 2017 from M&A. Collection of data for included portfolio companies multiple firms for same portfolio company were fully exited before the end of 2017). or initially backed in 2018 or later are excluded). Sources of data In the case of conflicting employment figures Data were collected through the European Data reported for the same portfolio company on the Holding period scenario Holding period scenarios Cooperative platform, which is jointly owned EDC platform, further sources (see above) were Employment Job creation and run by Invest Europe and other European consulted to decide on the most likely figure. private equity & venture capital national Further, checks were performed against what Pre-2017 2017 2018 Post-2018 Pre-2017 2017 2018 Post-2018 associations. Data submitted (including that employment level is most likely given sector supplied by France Invest) was supplemented of activity, available financial indicators, and A A by information from: financial reports; Bureau known investment levels in the company. B B van Dijk; and, when necessary, further sources C Review of most important contributors C such as company websites and press releases. D to the statistics D E Criteria for counting of employees working in The portfolio companies with employment levels E included portfolio companies high enough to significantly influence the data

Notes The following was applied for counting of employees: aggregations performed were manually checked, – A. Companies exited before end 2017 – A. Companies exited before end 2017 + B. Companies exited within 2018 + B. Companies exited within 2018 1 Europe includes: Austria, –– The number of employees counted refers to with review of financial reports / other sources Andorra, Belgium, Bosnia + C. Companies active in portfolio in 2017 and 2018 + C. Companies active in portfolio in 2017 and 2018 as necessary. These checks were also performed – Herzegovina, Bulgaria, figures as at year-end. + D. Companies entering the portfolio in 2017 + D. Companies entering the portfolio in 2017 Channel Islands, Croatia, on companies receiving the highest levels of Cyprus, Czech Republic, –– The number of employees counted refers + E. Companies entering the portfolio in 2018 – E. Companies entering the portfolio in 2018 Denmark, Estonia, investment, and those representing a large Finland, France, Germany, to full-time equivalents (FTE). Part-time percentage of employment at country level. Gibraltar, Greece, employees were counted as 0.5 FTE. Greenland, Guernsey, Hungary, Iceland, Ireland, –– The number of employees counted only includes Review of significant growth reported year-on-year Italy, Jersey, Latvia, Liechtenstein, Lithuania, those employees that have an employment Any company that had a reported change in Luxembourg, Macedonia, status with the company (i.e. the data exclude Malta, Moldova, Monaco, employment from 2017-2018 of more than 20% was Montenegro, Netherlands, Glovo’s estimated 21,000 couriers and Norway, Poland, audited, particularly to establish that the add-on or Portugal, Romania, Deliveroo’s estimated 30,000 contractors). carve-out effect was not being taken into account. San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Auditing considerations for collected data Ukraine, United Kingdom, Vatican City. The net effect of the audit process was an 2 Includes exclusions addition of 5,946 jobs in the data considered for performed by France Invest. job creation analysis from 2017-2018 (addition 3 Idem. of 66,391 and removal of 60,445 employees). 44 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 45

Methodology continued

Extrapolation methodology Extrapolation methodology Validation of the extrapolation results Definitions Employment extrapolation for the Employment universe Data on employment in 2018 for the known universe Comparisons of the splits within the extrapolated was used to extrapolate figures on employment for Portfolio companies data to other Invest Europe figures helped Venture 3,716,397 Explanation of extrapolation universes the European universe. The process was as follows: in both universes understanding of the extent the extrapolated Firms focused on one of three areas: Early-stage were categorised people working for data are a likely representation of the full (focused on investing in companies in the early Data were collected on a sub-set of the population Portfolio companies in both universes were based on three private equity backed European population. stages of their lives); Later-stage (providing capital (the population being all portfolio companies active categorised based on three variables: location variables: companies within the for an operating company which may or may not be sample (5,788) in 2018 and backed by private equity and venture (6 European regions); sector (12 categories); and Location Invest Europe’s report ‘Investing in Europe: profitable. Typically in C or D rounds); and All-stage capital), as described in sections above. latest stage of investment (5 stages). This led to (6 European regions) private equity activity 2019’ estimated that in 2019, (focused on both early and later stage investments). + segregation of the universes into 360 categories. 84% of the companies receiving investment were To estimate employment in Europe in companies Sector SMEs (< 250 employees). The known universe in backed by all private equity and venture capital For each of the 360 categorisations, estimates of (12 categories) Growth 6,765,779 this report matches rather well this estimation, people working for firms in Europe, the following universe was defined: the number of employees in portfolio companies in Latest stage of Firms focused on making private equity with 81% of companies receiving an investment other private equity the unknown population (full European universe) investment –– The European universe refers to the sum of: investments (often minority investments) in backed portfolio (5 stages). in 2018 being considered SMEs. On extrapolation were made using the known employment figures relatively mature companies that are looking for companies in Europe portfolio companies in Europe that received any however this figure falls to a range of 67% – 72%. of the known universe for that specific category4 This led to segregation investments from private equity and venture . primary capital to expand and improve operations of the universes into An explanation for this difference is: = capital firms within the previous five years The estimations were made using three scenarios: or enter new markets to accelerate the growth 360 categories. The ‘Investing in Europe’ publication calculates (2014-2018), and which had not been fully exited Scenario one: This scenario took the average of the business. 10,482,176 the percentage of SMEs using companies with before end 2018; portfolio companies which had number of employees for the category in the people working less than or equal to 250 employees in 2019 out of Generalist their latest investment before 2014 but which known universe and assigned it to each portfolio for private equity backed the total active companies receiving investments had a partial exit reported in 2017 or 2018. company within the same category in the unknown Firms focused on investing in all stages of portfolio companies in 2019. The extrapolation process for this report private equity. in Europe Adding the known universe (Invest Europe population. includes all companies with less than or equal to Sample: 22,659 companies members for which data were collected and treated Scenario two: This scenario excluded any 250 employees in 2018 out of the total active Buyout as described in section one above), the overview employment figure for a portfolio company in European universe (considered as portfolio Firms focused on acquiring companies by numbers for the two universes are as follows: the known universe which accounted for more than companies in Europe that received any purchasing majority or controlling stakes, financing Employment 50% of the total number of employees within the investments from private equity and venture the transaction through a mix of equity and debt quantification category in question. The average employment per capital firms within the previous five years The universe company was then calculated for the category after (2014-2018), and which had not been fully exited Other 298 excluding this figure, and applied to each portfolio Total number of portfolio companies before end 2018; and portfolio companies which Firms investing in turnaround situations, Invest Europe members' company in the unknown population. had their latest investment before 2014 but which mezzanine and other entities complying with portfolios studied Scenario three: This scenario automatically had a partial exit reported in 2017 or 2018). the private equity firm features. excluded the figure of the portfolio company Some of these included companies in this 5,788 –– Mezzanine – Firms using a hybrid of debt and with the maximum employment in each category in universe potentially graduated above the SME portfolio companies equity financing, comprising of equity-based studied 22,659 the known universe. The average employment per stage between the moment they received the European universe options (such as warrants) and lower-priority company was then calculated after excluding this investment and 2019. (subordinated) debt. figure, and applied to the unknown population. 4,292 –– Rescue/Turnaround – Firms investing equity SMEs researched In the report, scenario two is presented, as it is in companies that are in financial distress considered conservative enough, as well as being a with the view to restoring the company to 36% 5,788 sensible and reasonable approach to fairly estimate profitability. of data came from third Known universe employment figures at European level. parties (annual reports, Invest Europe members Bureau van Dijk, other Note public sources) 4 If a category in the unknown population was not present in the known universe, zero employees were considered to be in the unknown population, increasing the conservative nature of the estimation produced. 46 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 47

About us

In this section 48 About private equity 50 About Invest Europe 51 Acknowledgements 48 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 49

About private equity

The role of private equity in the economy Investment stages Growth Private equity: What makes private Impact in numbers ‘Private equity’ simply means that the portfolio This is private equity investment (often a 1 Delivering returns for savings and pensions equity different? company is owned privately – ie. its shares are minority stake) in relatively mature companies Over the past few Most private equity funding comes from years private equity has not listed on a public market. As an industry it that are looking for primary capital to expand citizens' savings. Pension and insurance become an important encompasses all sizes of investor and business, and improve operations or enter new markets From start-ups to well-established companies, most companies invest in private equity funds source of funding for at all stages, from fledgling start up through to accelerate the growth of an already European businesses. because it generates consistent returns businesses in Europe are privately owned, and not to global corporation. The broad investment successful business. over the long-term. This is important while Investing in Europe: listed on public markets. stages of private equity are outlined below: interest rates continue to remain low. Buyout €328 billion Private equity investors support these businesses Venture – Seed Financing provided to acquire a company. Helping companies to grow invested by private equity on their growth journey, and it's their combination This is funding provided before the portfolio It may use a significant amount of borrowed Private equity firms are actively involved in in European companies company has started mass production/ capital to meet the cost of acquisition. from 2014–2018 of patient and active ownership that sets the private the running of the businesses they invest distribution with the aim to complete research, Typically involves purchasing a majority or equity model apart from most other sources of funding. in, strengthening management, delivering product definition or product design, including controlling stake in the portfolio company. operational improvements and helping them Combining finance with active management, private market tests and prototypes. This funding is to expand into new markets. This active 27,260 equity adds value to the companies in which it invests. not used to for mass production/distribution. Rescue / Turnaround approach is also used to help under performing European companies Financing made available to an existing benefited from PE companies survive, protecting jobs and creating Clear alignment between private equity firms and Venture – Start-up business, which has experienced financial investment over the successful businesses with a strong future. 2014–2018 period their investors is also fundamental to how the industry This is funding for companies whose product distress, with a view to re-establishing operates. Long-term engagement delivers strong Providing patient investment or service is fully developed and starting profitable trading. mass production or distribution, and to cover Attracting global and sustainable growth, resulting in healthy returns Private equity funds make a long-term investment into Europe: initial marketing costs. Companies may be in Replacement Capital commitment to the companies they back, for Europe’s pension funds and insurers, benefiting the process of being set up or may have been Minority stake purchase from another private often investing for many years, and setting millions of European citizens. in business for a shorter time, but have not equity investment organisation or from 35% companies on a sustainable growth path. This sold their product commercially yet. The use another shareholder or shareholders. of the total amount helps businesses to plan for the future with raised by private equity This makes private equity an attractive investment of capital would be mostly to cover capital the reassurance that comes from having a in Europe between opportunity and sets it apart from other asset classes. expenditures and initial working capital, 2014–2018 came from committed partner. and these companies would not usually be outside the continent Creating value for investors and society generating a profit yet. By building better businesses, private equity Venture – Later stage plays a vital role in Europe’s prosperity – Financing provided for an operating benefiting employees, pensioners, investors company, which may or may not be profitable. and the wider economy. Private equity fund Later-stage venture tends to involve financing managers also invest their own money, meaning into companies already backed by VCs, they have a strong interest in the long-term typically in C or D rounds of investment. success of the investments they have undertaken.

Note 1 The term ‘private equity’ is used in this document to refer to all segments of the industry, including venture capital. The term ‘venture capital’ is used in specific contexts where there are issues that relate particularly to this segment. 50 Invest Europe Private Equity at Work Overview Employment & job creation Methodology About us 51

About Invest Europe Acknowledgements

Invest Europe is the voice of the private equity, venture capital and 4.8 million About Invest Europe Research European Data Cooperative infrastructure industries in Europe. We are a non-profit organisation Invest Europe is recognised as the authoritative What is the EDC? estimated number of data source for European private equity and With data on more with 25 employees based in Brussels, Belgium. people working for The EDC is the most comprehensive database than 1,400 European venture capital by institutions including Invest Europe members’ of European private equity and venture private equity and portfolio companies the European Commission and OECD Our members invest in privately held companies, from startups capital statistics. The EDC replaces Invest venture capital firms, (Organisation for Economic Co-operation the 2018 statistics to established firms, injecting not only capital but also dynamism, Europe’s previous database PEREP_Analytics. and Development). cover 89% of the innovation and expertise. All relevant historic data from PEREP was €688 billion in capital Rigorous research has underpinned Invest migrated to the EDC system in 2016. under management We are the guardian of our industry’s professional standards, Europe’s work with policymakers, the media, in Europe Basis of reporting demanding accountability, good governance and transparency 8,300 the public and investors since 1984. To deliver active Invest Europe member this trusted data and insight, Invest Europe All data since 2007 was restated and from our members. portfolio companies in 2018 collects data on more than 1,400 private complemented with additional information. The European Data equity firms. Audit efforts are conducted in close Through our research, we aim to play a constructive role in Europe's Cooperative database coordination with data contributors and prosperity and policymaking, providing authoritative data on trends brings together: The Invest Europe Research team is supported partnering national associations to ensure and developments in the industry, and highlighting our members’ by PEREP Analytics. the best coverage and consistent application 3,300 role in the economy. of methodology and definitions. Firms

Invest Europe processes all information at Dedicated analysts the data cut-off time to produce its annual 9,000 Silvia Costea statistics. Any differences between Invest Funds Cristina Porumboiu Europe’s statistics and those of other associations in the EDC may be related to 70,000 Our members Extended team different reporting approaches, restatements Portfolio companies GP Members LP Members and data cut-off timings. Monica Biolan Paul Buzoianu The most recent data publications are 255,000 Buyout 168 Inst. Investor 83 always available on Invest Europe’s website Transactions Adriana Craciun VC 163 Fund of Funds 69 www.investeurope.eu/research Total Total Ana-Maria Cristea 331 152 or by contacting the research team Luiza Dima [email protected] Alexandra Ehupov Invest Europe members and data contributors Iuliana Furica are eligible to receive dedicated research and Sofian Giuroiu data support from our research team. Associate Members Member firms located in For more information Iuliana Petre Please contact us at [email protected] Please visit www.investeurope.eu to find out more. Law Firm Dragos Tanasescu Consulting /Advising 37 11 Total Placement Agent countries across countries outside 104 Europe Europe 3rd Party Fund Admin Other Invest Europe Bastion Tower T +32 2 715 00 20 Place du Champ de Mars 5 F +32 2 725 07 04 B-1050 Brussels, Belgium [email protected] www.investeurope.eu

Disclaimer

The information contained in this report has been produced by Invest Europe, based on data collected as part of the European Data Cooperative (EDC) and other third-party information. While Invest Europe has made every effort to ensure the reliability of the data included in this report, Invest Europe cannot guarantee the accuracy of the information collected and presented. Therefore, Invest Europe cannot accept responsibility for any decision made or action taken based upon this report or the information provided herein.

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