In the past two years, NYC based Private equity firm Vestar Capital has cut its global investment staff from 58 to 33.
Now its just shuttered two offices (Munich and Paris), and laid off 10 European executives, says the Wall Street Journal.
Earlier this year, Vestar closed offices in Milan and Tokyo. Their plan is to focus on the United States, partly because of all the uncertainty in Europe right now.
Bottom line, this just shows that it’s a cruel world for the private equity industry. First, they can’t sell the companies they’re holding (even though those companies dropping in value), and second it’s expensive to raise debt to buy new acquisitions.
So everyone is down-sizing. For example, Providence Equity Partners is raising $6 billion for a new fund. In their last round, it raised $12 billion.
And since firms generally charge clients based on the size of the funds they’re managing, that means firms will make less money — money that they need in order to pay their expensive employees.
In short, this may just be the beginning.