"A Primer on Private Equity at Work," by Eileen Appelbaum of CEPR and Rosemary Batt of Cornell University, has been published in the September-October issue of Challenge: The Magazine of Economic Affairs (behind a paywall here).
Based on this February 2012 CEPR working paper, the primer pulls from a widely-cited body of research to illuminate some of the major controversies surrounding private equity, including whether private equity creates or destroys jobs, whether it provides better returns than the broad stock market to investors, and whether the debt burden assumed by firms acquired by private equity substantially increases the risk of bankruptcy.
It finds that targets of private equity usually have faster job growth than other companies before they are taken over. On average they also have higher rates of profitability. The claim that private equity mostly helps struggling companies is not borne out by the facts. Moreover, the investors who provide private equity firms with the capital typically make less money than if they had invested in a stock market index. It is a much-needed primer on what private equity firms actually do.