More Thoughts, Details on Sun Capital Layoffs
Yesterday’s big news was that Sun Capital Partners laid off a little more than 10% of its 200-person staff. I first predicted PE firm layoffs months ago and have been covering them ever since, but this one really took me by surprise. If any firm should be immune from layoffs, shouldn’t it be Sun? This is a firm focused on distressed opportunities, which means that these should be its salad days. How do you cut folks when deal-flow should be at a record high? Particularly when your investment model is to eschew leverage whenever possible? It’s certainly true that Sun has been racking up portfolio company bankruptcies, but that’s just a reflection of the firm’s bad judgment during the boom times (really, how is a retailer struggling in 2006 going to be better off today?). It shouldn’t color plans going forward when the macro environment has flipped into Sun’s favor.
