Data collection & audit
Definition of portfolio companies to be included
Criteria for inclusion and exclusion:
Only data of portfolio companies with European1 headquarters were collected regardless of the location of the employee.
Only European companies active during 2023 within the portfolio of a private equity investor had data collected (i.e. companies exited within 2022 or backed post-2023 were excluded).
Collection of data for included portfolio companies
Sources of data
Data were collected through the European Data Cooperative platform, which is jointly owned and run by Invest Europe and other European private equity national associations. Data submitted (including that supplied by France Invest) was supplemented by information from: financial reports; Bureau van Dijk; and, when necessary, further sources such as company websites and press releases.
Criteria for counting of employees working in included portfolio companies
The following was applied for counting of employees:
The number of employees counted refers to figures as at year-end.
The number of employees counted refers to full-time equivalents (FTE). Part-time employees were counted as 0.5 FTE.
The number of employees counted only includes those employees that have an employment status with the company (i.e. the data exclude2 Glovo’s estimated 61,000 couriers and Deliveroo’s estimated 135,000 contractors).
The total number of employees for each company was registered in the country of the company headquarters.
Auditing considerations for collected data
The net effect of the audit process was an addition of 137,271 jobs in the data considered for job creation analysis from 2022-2023 (addition of 514,798 and removal of 377,527 employees). In addition, net growth of 121,019 jobs due to the add-on/carve-out effect was excluded. The main audit processes the data were subjected to were the following.
Add-on effect
When considering growth of employment from 2022-2023, any change due to mergers & acquisitions during 2023 were excluded. Whilst some of this effect was excluded prior to auditing, on audit an inorganic growth of 121,0194 jobs from 2022-2023 was further excluded from the analysis.
Review of different employment figures from multiple firms for same portfolio company
In the case of conflicting employment figures reported for the same portfolio company on the EDC platform, further sources (see above) were consulted to select the most likely figure. Further, checks were performed against what employment level is most likely given sector of activity, available financial indicators, and known investment levels in the company.
Review of most important contributors to the statistics
The portfolio companies with employment levels high enough to significantly influence the performed data aggregations were manually checked, with review of financial reports / other sources as necessary. These checks were also performed on companies receiving the highest levels of investment, and those representing a large percentage of employment at country level.
Review of significant growth reported year-on-year
Any company that had a reported change in employment from 2022-2023 of more than 20% was audited, particularly to establish that the add-on or carve-out effect was not being taken into account.
The analysis: Only considers employees who have an employment status with the company, excluding self-employed workers and contractors. The calculation of job growth excludes any add-ons to companies such as those resulting from M&A.
Notes
1. Europe includes: Austria, Andorra, Belgium, Bosnia – Herzegovina, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, Ireland, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine, United Kingdom, Vatican City.
2. This exclusion is performed despite riders in some countries legally gaining employee-status.
3. Includes exclusions performed by France Invest.
4. Idem.
Definition of the universes
Employment universe
The Employment universe is established to show total employment within included portfolio companies at a specific time: as of end of 2023.
Definition of employment universe
Job creation universe
The Job creation universe is a sub-section of the Employment universe that shows the changes in employment levels from 2022 to 2023 within included portfolio companies.
Definition of job creation universe
With exclusion of outlier data and with consideration of different case scenarios.
Note
Due to changes in data coverage year-on-year, we advise readers not to compare data points in this report with previous reports.
The Employment and Job creation universes refer to the same overall base of portfolio companies, the difference is the following: Employment refers to companies where just 2023 data is known (including extrapolated figures), whilst Job creation refers to companies where data for both 2022 & 2023 is known (and no extrapolation is applied).
2017-2023 job creation universe
n = 3,050
The 2017-2023 multi-year analysis is based on a sample of portfolio companies that have an investment year in the EDC database <= 2017, and an exit year in the same database that is >= 2023.
Holding period analysis
Compared to multi-year trend data, where the employment data is known for the full period 2017-2023, the holding period analysis includes the companies with known employment data for at least two consecutive years, out of the active universe (2023: 28,610). Outliers have been excluded using the Windsorization method. Windsorization is a statistical technique used to limit the influence of extreme outliers by capping values that fall outside a specified percentile range. Instead of removing these extreme values, Windsorization replaces them with the nearest value within the chosen percentile bounds. We applied the 5th-95th percentile Windsorization, and any values below the 5th percentile are replaced with the 5th percentile value, and any values above the 95th percentile are replaced with the 95th percentile value. This method helps reduce the impact of outliers without losing data, ensuring a more stable and reliable analysis.
Extrapolation methodology for the Employment universe
Explanation of extrapolation universes
Data were collected on a sub-set of the population (the population being all portfolio companies active in 2023 and backed by private equity, as described in sections above).
To estimate employment in European companies backed by all private equity firms in Europe, the following universe was defined:
The European universe refers to the sum of: portfolio companies headquartered in Europe that received any investments from private equity firms within the previous five years (2019-2023), and which had not been fully exited before end 2023; portfolio companies which had their latest investment before 2019 but which had a partial exit reported in 2022 or 2023.
Adding the known universe (Invest Europe data contributors for which data were collected and treated as described in section one above), the overview numbers for the two universes are as follows:
The universe
Total number of portfolio companies
Extrapolation methodology
Data on employment in 2023 (excluding add-ons/carve-outs during the year) for the known universe was used to extrapolate figures on employment for the European universe. The process was as follows:
Portfolio companies in both universes were categorised based on three variables: location (6 European regions); sector (13 categories); and latest stage of investment (8 stages). This led to segregation of the universes into 624 categories.
For each of the 624 categorisations, estimates of the number of employees in portfolio companies in the unknown population (full European universe) were made using the known employment figures of the known universe for that specific category4. The estimations were made using three scenarios:
Scenario one: This scenario took the average number of employees for the category in the known universe and assigned it to each portfolio company within the same category in the unknown population.
Scenario two: This scenario excluded any employment figure for a portfolio company in the known universe which accounted for more than 60% of the total number of employees within the category in question. The average employment per company was then calculated for the category after excluding this figure, and applied to each portfolio company in the unknown population5.
Scenario three: This scenario automatically excluded the figure of the portfolio company with the maximum employment in each category in the known universe. The average employment per company was then calculated after excluding this figure, and applied to the unknown population.
In the report, scenario two is presented, as it is considered conservative enough, as well as being a sensible and reasonable approach to fairly estimate employment figures at European headquartered companies.
Portfolio companies
in both universes
were categorised
Location
(6 European regions)
Sector
(13 categories)
Latest stage of
investment
(8 stages).
This led to segregation
of the universes
into 624 categories.
Notes
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.
5. In order to account for differences in company size distribution between portfolios of Invest Europe & non-Invest Europe members, the process described in this scenario was adjusted as so: a) the unknown data for portfolio companies backed by Invest Europe members was estimated based on Invest Europe members’ known employment information; b) the unknown data for portfolio companies backed by non-Invest Europe members was estimated based on all known employment data, regardless of Invest Europe membership status.
Validation of the extrapolation results
Comparisons of the splits within the extrapolated data to other Invest Europe figures helped understanding of the extent to which the extrapolated data are a likely representation of the full European population.
The percentage of the universe which is considered SME in this report differs slightly to that seen in Invest Europe’s annual activity report ‘Investing in Europe: private equity activity 2023’. An explanation for this difference is:
The ‘Investing in Europe’ publication calculates the percentage of SMEs using companies with less than or equal to 250 employees in 2023 out of the total active companies receiving investments in 2023. The extrapolation process for this report includes all companies with less than or equal to 250 employees in 2023 out of the total active European universe (considered as portfolio companies headquartered in Europe that received any investments from private equity firms within the previous five years (2019-2023), and which had not been fully exited before end 2023; and portfolio companies which had their latest investment before 2019 but which had a partial exit reported in 2022 or 2023).
Definitions
Venture
Firms focused on one of three areas: Early-stage (focused on investing in companies in the early stages of their lives); Later-stage (providing capital for an operating company which may or may not be profitable. Typically in C or D rounds); and All-stage (focused on both early and later stage investments).
Growth
Firms focused on making private equity investments (often minority investments) in relatively mature companies that are looking for primary capital to expand and improve operations or enter new markets to accelerate the growth of the business.
Buyout
Firms focused on acquiring companies by purchasing majority or controlling stakes, financing the transaction through a mix of equity and debt.
Generalist
Firms focused on investing in all stages of private equity.
Other
Firms investing in turnaround situations, mezzanine and other entities complying with the private equity firm features.
- Mezzanine – Firms using a hybrid of debt and equity financing, comprising of equity-based options (such as warrants) and lower-priority (subordinated) debt.
- Turnaround/Rescue – Firms investing equity in companies that are in financial distress with the view to restoring the company to profitability.
Holding period
Is the duration for which a private equity firm retains an investment in a portfolio company before exit.
Employment
extrapolation
6,769,037
people working for
private equity-backed
companies within the
sample (17,586)
+
4,437,139
people working for
other private equity-
backed European
portfolio companies
=
11,206,176
people working
for private equity-backed
European portfolio
companies
Sample: 28,610 companies
Employment
quantification
238
Invest Europe
data contributors’
portfolios studied
17,586
portfolio companies
studied of which
14,225
SMEs
34%