Robert Samuelson explains what venture capitalists do

Samuelson's piece is available here. The question is what would have happened to the firms that Bain got involved with if they had never tried to turn the company around.

What’s instructive is that, in both cases, total job gains and losses dwarfed the net change. In the two years, private-equity-owned firms created new jobs equal to about a fifth of their workforces — and destroyed old jobs, often at closed locations, in similar numbers. For the non-private-equity controlled firms, the comparable proportion was about one-sixth. Job turnover is routinely high, but private-equity-controlled firms are quicker at “shrinking underperforming facilities and expanding productive and profitable facilities,” says University of Chicago economist Steven Davis, one of the study’s authors. These firms also had greater gains in efficiency, he says. . . .