The cuts keep coming. Sun Capital Partners has just announced that it is letting 23 people go, including the managing directors of it’s New York office, Gary Talarico and Erik Swimmer. Erin Griffith over at PEHub rightly asks, “Why?”. Given Sun Capital’s rather prodigous pipeline, and the fact that we’re going through an ideal period for a firm that focuses on investing in turnarounds, underperforming businesses, and special situations, this move seems a bit odd.
However, maybe they’re simply just taking this opportunity to reshuffle personnel? The turnover rates for staff at PE firms has never been particularly high compared to other segments of M&A, and given the conditions that portfolio firms are facing, one has to make sure a team is running on all cylinders.
The Sun Capital move aside, there’s probably going to be a lot of people being shuffled around in the buyout houses in the coming months. A lot of the folks who have been hired in recent years are thin on operational and strategic know-how. Mere financial engineering is not going to salvage many of the deals done in 05-07. People are going to have to get their hands dirty and a stable of number crunchers may not be best suited for the task.