Retail Customer Reactions to Private Equity Acquisitions

Acquisition announcements by private equity funds are associated with significant reductions in customer visits to target firm outlets. These reductions occur in primary but not in secondary buyouts. The decrease is unlikely to be due to operational changes, as it takes place at announcement and reverses following deal completion. The decrease is larger for more salient deals and for outlets facing more competition, and smaller in areas with higher income, stock market participation, and self-employment rates. Customer and employee reviews do not become more negative. Survey results show that consumers view private equity ownership more negatively than other ownership types.