A new book out from an author with a fact-challenged past is resurfacing tired, debunked myths around private equity’s role in society. The reality is private investment works, and it continues to help grow communities, secure retirements, and build businesses across a wide range of industries.

Here are the facts:

Small business

MYTH: Private equity squashes small business.

FACT: Private equity investment is essential to providing small business owners with opportunities to dream, take risks, and succeed. Entrepreneurship is central to America’s DNA.

• In 2022 alone, 85% of all private equity-backed businesses were small businesses with fewer than 500 employees. The median PE-backed business employed 69 workers.
  
  
• PE-backed small businesses directly employed a total of 1.4 million workers throughout the U.S. economy in 2022. Suppliers to PE-backed small businesses employed an additional 1.3 million workers.
  
  
• In 2021, despite COVID-19-related challenges, private equity invested over $1 trillion in communities across America. That includes investment in 5,205 small businesses, representing 74% of total investments made by private equity that year.
  
  
• As interest rate hikes make the cost of capital more expensive and fears of a recession rise, private investors are helping to move innovation forward, rebuild the economy, and create new, well-paying jobs while providing returns that deliver secure retirements for hard working Americans.
  
  

See more: Private Equity Investments Boost Workers, Benefit Communities Across United States

Workers

MYTH: Private equity prioritizes profits over workers.

FACT: Private equity directly provides millions of Americans with reliable, well-paying jobs while building higher-performing, safer, and more welcoming workplaces by increasing standards of excellence and promoting cultures of inclusion.

• The private equity sector employed 12 million workers earning a total of $1 trillion in wages in 2022.
  
  
• The average worker at a private equity-backed business earned $80,000 in wages and benefits in 2022. For a full-time worker, this breaks down to a wage of roughly $41 per hour.
  
  • Even in the District of Columbia, state of Washington, and California—which boast minimum wages upwards of $15—private equity-backed companies offer compensation rates almost three times as high.
    
    

• Industries with private investment create more jobs and generate higher profits than industries that do not.
  
  
• Researchers from the Bureau of Labor Statistics and the University of Texas at Austin found that firms that have undergone a private equity buyout experienced fewer safety violations and had improved workplace cultures of safety.
  
  
• A paper published in The Review of Financial Studies shows that private equity firms improve management practices, resulting in significantly reduced store closure risk and saving jobs in the long run.
  
  

See more: Private Equity Investments Boost Workers, Benefit Communities Across United States

Health care

MYTH: Private equity puts short term profits over the well-being of our health care system.

FACT: From enabling cutting-edge innovation to expanding access to quality care, private equity investments in U.S. health care improve patient outcomes.

• From pharmaceutical innovators to local urgent care clinics, private equity has committed nearly $1 trillion to the U.S. health care industry since 2006.
  
  

• Private equity firms can help pharmaceutical manufacturers weather capital risks inherent to early-stage drug development, helping bring more life-saving medicines to market.
  
  
• Over the past two decades, private equity firms have invested in hundreds of drug candidates otherwise ripe for abandonment, bringing to fruition new therapies that benefit thousands of patients across the United States.
  
  

• Over the past three years, as a result of a global pandemic, the U.S. health care system experienced unprecedented vulnerabilities and challenges. Health care-focused private equity funds raised nearly $50 billion, establishing a substantial pool of capital available for future investment into hundreds of health care companies in the coming years.
  
  

Public pensions

MYTH: Private equity is the wrong asset class for public pension funds and other institutional investors.

FACT: Private equity delivers strong, reliable, and robust returns for everyday Americans.

• A report from the Urban Institute’s Income and Benefits Policy Center found private equity in retirement funds “would most likely raise the average rate of return and increase the average savings of retirement accounts.”
  
  
• Research from the Institute for Private Capital and Defined Contribution Alternatives Association found that investing in private funds consistently increases average portfolio returns and reliably raises the amount of return for the risk associated with a portfolio.
  
  
• A report from Neuberger Berman (a private, independent, employee-owned investment manager) analyzing private equity market performance during large-scale stock market disruptions—like the dot-com bubble, the 2007-2009 global financial crisis, and the COVID-19 pandemic—found that private equity historically experienced a less significant drawdown and quicker recovery than public equities in all three cases.
  
  
• The largest pensions and retirement funds consistently turn to private equity for their investment needs.
  
  • 89% of public pension funds choose to invest with private equity.
    
    
  • On a dollar-weighted basis, private equity makes up 11% of public pension portfolios.
    
    
  • Public pension funds trust private equity’s ability to deliver consistent, steady returns for retirees—as 93% of them plan to increase their private equity allocations.
    
    
  • At the end of last year, Governor Kathy Hochul signed a law allowing New York City and New York state pensions to increase allocations to alternative investment classes, like private equity, to 35% from 25%.
    
    

See more: Pension Fund Managers Know They Can Rely on Private Equity for Strong and Reliable Returns

Sustainability

MYTH: Private equity does not support addressing climate change.

FACT: Private equity is stepping up to power the clean energy transition, even as interest rates rise and other investors back away from clean tech investments.

• Over the past decade, private capital has sponsored more than 1,000 U.S. clean-tech companies, investing almost $150 billion in the sector.
  
  
• According to a report published by American Investment Council and Pitchbook, private equity invested a record $27 billion in clean technology in 2021. The vast majority of that amount—$21.5 billion—was invested in renewable energy.
  
  

• The International Renewable Energy Agency has estimated that over $100 trillion of capital will be required to achieve the Paris Agreement goals and mitigate the effects of global climate change. Private equity investment is critical to meet this financing gap.
  
  
• Private equity investments are enabling the smart, domestic development of oil and gas through the transition to alternatives—helping meet the demand for affordable, reliable energy for all Americans.
  
  

See more: Private Investment Leads the Way on Emerging Energy Technologies