Apax Co-CEO Quits

Allan Karp has resigned as co-CEO of Apax Partners U.S., according to multiple sources close to the firm. The move comes just two months before a final close is scheduled for Apax Excelsior VII, and will be exacerbated by the simultaneous resignation of U.S. consumer and retail group head Chris Reilly.

Apax isn’t commenting publicly (both men remain on the firm’s website), but the moves seem to be just the latest changes caused by Apax’s strategic shift toward large/mega-market exclusivity.

The first phase was an abandonment of venture capital, which came shortly after Apax U.S. merged with buyout shop Saunders Karp & Megrue in early 2005. Now it seems that Apax U.S. also is squeezing out both small-market and mid-market buyouts, which is where Karp liked to invest. One has to wonder if he’s regretting his original decision to join Apax following the merger, considering that some of his other partners spun out to form an independent firm focused on lower-middle-market growth companies (Parallel Investment Partners).

No information yet on where either Karp or Reilly will end up, but my “even money” hunch is that they’ll try to launch some sort of independent effort. Both men also are expected to maintain their existing Apax-related board seats.

For Karp, that means: Spyder Active Sports, Cafe Rio, Ale House, Charlotte Russe, Comark and Elephant Bar. For Reilly, that means: Norcraft Companies, Comark Inc., S.B. Restaurant Corp. and Encompass Home Health.

As for the Apax U.S. masthead, John Megrue will stay on as sole CEO. In addition, European partners Christian Stahl (media) and Nico Hansen (tech/telecom) are expected to move to New York and join the U.S. team shortly.