Earlier today, I wrote about “hearing that at least two U.S.-based mega-buyout firms are holding internal discussions about firm-wide cuts.” One of those firms was The Carlyle Group, which is now confirming a WSJ report that it will cut 10% of its workforce and close its Menlo Park, Calif. office.
“In response to extraordinary market conditions, Carlyle has taken measured steps to balance its cost structure with the current investment climate,” says Carlyle spokesman Chris Ullman. “The firm is well positioned to take good care of our investment portfolio and has the resources to create and respond to compelling investment opportunities.”
The decision will result in approximately 100 layoffs, which comes on top of Carlyle’s moves last month to close both its Warsaw office (10 staffers) and its Asia leveraged finance team (7 staffers). A majority of the affected employees work in the back-office, but dozens of investment professionals also are being let go. All laid-off employees will receive severance packages.
Carlyle only opened its Menlo Park office this past January, for two reasons. First was to give its tech buyout team a Silicon Valley presence, and second was to expand Carlyle’s venture and growth capital activities. Carlyle managing director Todd Neunam was in charge of the first part, but ultimately returned to DC to lead the firm’s industrials group. Carlyle subsequently initiated a search to hire his replacement, but those plans have obviously been shelved.
As part of the growth and venture capital expansion, Carlyle hired managing directors Nick Sturiale (formerly with Seven Rosen Funds) and Greg Rossmann (Pequot Capital), plus principal Jeb Miller (ComVentures). Since then, however, just two of that practices 15 deals have been for West Coast companies — an imbalance that helped precipitate the office closure. It also didn’t help that Menlo Park was one of Carlyle’s newest offices, and that most of its staffers had been hired after the group closed its third fund in Q3 2007 with $605 million (40% invested to date).
Sturiale, Rossmann and Miller have all been laid off, as have two other growth equity team members in Menlo Park. The office’s U.S. leveraged buyout staff will be relocated.
Carlyle plans to maintain its small San Francisco office, but likely will relocate it to more modest digs.