Ok, so the industry has had layoffs before (for VC there was a wave of firms downsizing after the dotcom bubble burst in the early 2000’s, etc.) but for buyout houses the coming months may see some historic scaling back of personnel. First up there’s American Capital cutting 19% of it’s workforce which should total about 110 people across it’s US and European offices. 3i is trimming 15% of it’ workforce, which represents over 100 individuals. Now, the Carlyle Group has just announced that they are paring back about 100 jobs, or 10% of its work force, citing “extraordinary market conditions.” This move that is seen as a step to get the firm back to it’s early 2007 personnel levels. In all cases the majority of the layoffs are coming from the backoffice (HR, Legal, Accounting, etc.), but not all.
Private Equity has often been cited as a possible substitution for traditional I-Banking. Forgetting that debate for now, it’s still interesting to point out Private Equity’s quick learning of the I-Banking binge-and-purge HR policies. Talk to any recruiter over the second half of 2007/first half of 2008 and they would have openly expressed dismay at the fact that buyout shops were still recruiting and hiring. Now the reality of the situation has hit home and the firms are looking to shed some of the dead weight that is sitting idle until the debt markets return (Buyout houses won’t start making deals in high numbers again until the leverage returns. It’s much harder to break a hurdle rate without gearing). Until then the employment numbers in the business will contract.
On a side note I’m graduating at the end of this month. God did I time this market wrong. Oh well.
It’ll all work out. It’ll all work out.