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.

The firm’s spokeswoman yesterday told Erin that this is no different than layoffs at firms like Blackstone and Carlyle, but that’s just silly on its face. Blackstone and Carlyle were making most of their bones on mega-buyouts – not to mention real estate – and those are shrinking verticals. Distressed, however, is expanding like balloons at a carnival water-gun game. Sun may indeed have more employees today than it did one year ago, but it should.

This also isn’t about a dearth of dry powder. Sun closed on a $6 billion fund in April 2007, compared to a $4 billion target. Moreover, it has no plans to either cut the fund size or otherwise reduce LP fees.

Sun obviously understands its internals far better than I do, but something just seems off here. Maybe the distressed pipeline is drier than I’ve been led to believe. Or maybe Sun is trying to make existing fee revenue go further, given the market-wide lack of distributions (all Sun investment pros have the same carry). Or maybe something else…

As for specifics, those leaving include New York-based managing directors Gary Talarico and Erik Swimmer, although I’m told that Boca got hit harder than New York. Sun also put out a statement specific to Talarico, who ran New York (Steve Liff will be in charge going forward). It said, in part:

“Gary has advised us that his father is gravely ill and that he wants to spend more time with him. In addition, Gary, who has had a longstanding interest in public affairs, is interested in pursuing several opportunities in the public sector at this historical time of challenge which will likely require a significant time commitment away from his responsibilities at Sun Capital.”

Also gone is Victor Gao, who had been chairman and president of Sun Capital Partners China.

Sun yesterday removed a bunch of names from its website, so what follows are twenty nineteen individuals who peHUB identifies as having been removed. It is possible that some of these individuals were not officially part of the layoffs, and we’re obviously missing a few (we’ve only got 20 names, and there were 23 people cut). Anyway, here you go:
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John P. Beauclair, Principal, is responsible for identifying investment and financing opportunities in the United States. Mr. Beauclair has over nine years of leveraged buyouts and mergers and acquisitions experience, having served most recently as Co-Founder and Executive Director with TransOcean Capital, a middle market buyout firm, and Senior Vice President with Ridgewood Capital, an early stage venture capital firm. He graduated with a Bachelor of Arts degree in Political Science from the University of California at Berkeley, and received a Masters of Business Administration in Finance from the Wharton School of the University of Pennsylvania.

Philip E. Brown, Vice President, has experience in private equity, investment banking, and distressed investing. Mr. Brown has re-joined Sun Capital Partners in January 2006 to focus on investment analysis and sourcing for the Securities Funds after spending two years with Buckeye Capital Partners L.P., a hedge fund that specialized in distressed investing. Prior to joining Buckeye, he spent approximately one year with Sun Capital as an Associate and three years with Wasserstein Perella & Co. / Dresdner Kleinwort Wasserstein in the mergers and acquisitions department. Mr. Brown graduated from Georgetown University with a Bachelor of Arts degree in Economics and History.

Eddy Casimir, Helpdesk Engineer.

Jin-Woo Chung, Senior Associate, joined Sun Capital Partners from the Financial Sponsors Group of UBS Investment Bank. At UBS, Mr. Chung focused on the origination and execution of leveraged buyouts, refinancings, and equity offerings across a variety of industries for leading financial sponsors. Prior to UBS, Mr. Chung graduated with a Bachelor of Arts degree in Economics from Yale University in 2003.

Miriam Diwan, Associate, joined Sun Capital Partners in 2006 having served for two years in the Syndicated and Leveraged Finance Group of J.P. Morgan Securities Inc. At JPMorgan, she focused on the origination and execution of leveraged buyouts and other debt offerings for leading financial sponsors. Ms. Diwan received a Bachelor of Science degree in Economics from The Wharton School and Bachelor of Arts degree in Communications from the College of Arts & Sciences of the University of Pennsylvania.

MD Victor F. Gao, Chairman and President, Sun Capital Partners China, joined Sun Capital Partners China in 2008 having had 20 years experience in senior financial and executive leadership roles with U.S. transnationals. Mr. Gao served from 2002 to 2007 as President, Greater China, Eaton Corporation, a global $13.0 billion diversified industrial manufacturer, and Chairman and President of Eaton (China) Investments Co. Ltd. where he was in charge of mergers and acquisitions in the region. Prior to joining Eaton, Mr. Gao served as CFO and board member of UTStarcom China, a NASDAQ-listed China-based telecom equipment suppler. Between 1995 and 2001, he held positions as head of China Treasury Center, Finance Director, and Business Development Manager with General Motors and Delphi Automotive Systems both in the United States and China with responsibilities in business development, mergers and acquisitions, corporate finance, strategic planning, banking, and risk management. Mr. Gao received a Bachelor of Engineering degree in Food Engineering from Hei Long Jiang Institute of Commerce and a Master of Business Administration and a Master of Science in Engineering from the University of Maryland at College Park.

Sumit Mittal, Associate, joined Sun Capital Partners in 2006, having served for two years as an Investment Banking Analyst at Credit Suisse First Boston in the Global Industrial and Services Group, where he was involved with the analysis and execution of high yield, equity, and merger and acquisition transactions. Prior thereto, Mr. Mittal was an Analyst within the fixed income sales and trading division at UBS Investment Bank. He received a Bachelor of Science degree in Finance from the Leonard N. Stern School of Business of New York University and a Certificate in Financial Markets from the London School of Economics.

Brian M. Kabot, Vice President, has over seven years of principal investing experience. Prior to joining Sun Capital Partners in 2006, Mr. Kabot served as an Associate with Reservoir Capital Group where he focused on investing in public securities and non–control private equity. He previously served with Questor Management Company, a private equity fund specializing in turnarounds and special situations, and with DLJ Merchant Banking, a leading private equity investor focused on the third–party logistics industry. Mr. Kabot received a Bachelor of Science degree in Finance and Accounting from the School of Hotel Administration from Cornell University.

Brian LaBasco, Associate, joined Sun Capital Partners in 2008, having served for two years as an Investment Banking Analyst in the Mergers and Acquisitions Group of Lehman Brothers, New York, where he focused on Healthcare transactions. He received a Bachelor of Business Administration degree in Finance from the University of Miami.

Candy Lu, Office Manager.

Maryrose Luciano, Procurement Coordinator

F. Dixon McElwee Jr., Vice President, has over 30 years experience in senior finance and operations management in a wide variety of industries. Immediately prior to joining Sun Capital Partners, Mr. McElwee served as CFO for Frozen Food Express Industries, the largest public transport carrier of perishable goods in North America, for seven years, and prior, he served with Cameron Ashley Building Products, Meridian and Quest Capital, and Intercredit Corporation in similar senior financial capacities. He also served as Vice President and Treasurer with American Airlines and Treasurer with The Continental Group, a Fortune 500 packaging and forest products manufacturer. Mr. McElwee received his Bachelor of Science degree in Mathematics from The Virginia Military Institute and Masters in Business Administration from Stanford University.

Brian Meyer, Director, focuses on identifying and evaluating both control and non-control investment opportunities for Sun European Partners. Mr. Meyer has thirteen years experience in mergers and acquisitions and business development with several leading investment banks including Lazard Freres, Goldman Sachs, Lehman Brothers, and Thomas Weisel Partners. Mr. Meyer received his Bachelors of Arts degree, cum laude, from Dartmouth College and his Masters of Business Administration, with Distinction, from Columbia Business School, where he was awarded both the Goldman Sachs and the Wein Fellowships.

Paolo Monaco, Senior Associate, joined Sun European Partners in 2005 having served as an Investment Analyst with Phylon Investment Advisers LLP, a European-focused hedge fund. Prior to that, Mr Monaco worked at UBS in London in the Investment Banking Division for three years, focusing mainly on the Industrial Sector. He received his Master of Arts degree in Economics with First Class Honours from the University of Edinburgh.

Dmitriy Shinkar, Associate, joined Sun Capital Partners in 2007. Prior to which, he worked as an Investment Banking Analyst with Greenhill & Co. focusing on merger and acquisition transactions in a variety of industries. Mr. Shinkar received a Bachelor of Science degree in Economics from The Wharton School of the University of Pennsylvania.

Anuj Singh, Vice President, served as an Analyst with Wachovia Securities for two years prior to joining Sun Capital Partners, specializing in mergers and acquisitions, equity offerings, debt financings, and private placements in the healthcare industry. With Sun Capital Partners, Mr. Singh helps execute due diligence and financial analysis for investment transactions in the retail, flexible packaging, manufacturing, apparel, chemicals, furniture and information technology industries. He received his Bachelor of Science degree in Business Administration from the University of Evansville.

Erik R. Swimmer, Managing Director, has extensive experience in mergers and acquisitions in North America, Europe, and emerging markets. Prior to joining Sun Capital Partners’ New York office in 2002, Mr. Swimmer worked with Credit Suisse First Boston and Merrill Lynch in their mergers and acquisitions groups and with Swiss Bank Corporation (currently part of Union Bank of Switzerland) in various product groups. He received his Bachelor of Arts degree in Economics from New York University and his Masters of Business Administration in Finance from Columbia University.

Gary M. Talarico, Managing Director, has over 20 years of leveraged buyout and investment banking experience in the United States and Japan. Mr. Talarico is Head of Sun Capital Partners’ New York office. From 1999 to 2003, Mr. Talarico served as Managing Director and Head of Global Corporate Finance for Deutsche Bank Group in Tokyo, having joined Deutsche Bank’s predecessor firm, BT Alex Brown in 1998, where he was Managing Director and head of its securities business in Japan, serving as Branch Manager of BT Asia Securities. He began his career in investment banking in 1983 with Lehman Brothers, where he spent 15 years, serving in his last position as a Managing Director in the Financial Services Group in New York responsible for delivering investment banking services to major financial institutions in the U.S. and Japan. Mr. Talarico received his Masters of Arts in International Economics and Asian Studies from the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University, where he currently serves as a member of the Advisory Board. Mr. Talarico is a board member of the Japan Society. He also has undergraduate and graduate degrees in Sociology and Political Science from Illinois State University.

Yi Hua (Steven) Yang, Senior Associate, joined Sun Capital Partners in 2008. Prior to which, he served as the Business Development Director of Electronic Security, North Asia with UTC Fire & Security. Previously, he worked for two years as the Business Development Manager with Eaton (China) Investments Co., Ltd., the Asia Pacific subsidiary of Eaton Corporation, and between 2000 and 2006, Mr. Yang served in the corporate finance service group of Arthur Andersen and PricewaterhouseCoopers, Shanghai office, providing professional merger and acquisition and valuation advisory services in China. Mr. Yang received a Bachelor of Arts degree in Economics from the Shanghai Institute of Foreign Trade and a Masters in Business Administration from the Sauder School of Business, University of British Columbia.