PE Firm Graveyard
What’s the biggest name PE shop to close doors and what led to its downfall?
There are plenty top-of-mind stories of PE firm success over the last 30 years; there’s a handful of PE firm turnarounds (eg Boston Ventures). But there aren’t a lot of top of mind PE firm failures. What’s the biggest blow up and wasn’t recovered from? I’m sure plenty of first time funds don’t make it, but of those that make it to funds 3, 4, etc what leads to a total failure?
Most notable is probably Forstmann Little
It is pretty rare for a firm to completely wind down, but Willis Stein is an example of a $1.8 billion Fund III that never raised another fund. Usually it is some combination of poor performance and bad succession planning. What is much more common is a “reboot” where a firm downsize and raises a smaller fund that often involves getting rid of dead wood at the partner level and narrowing the fund’s focus to its better performing partners / industries.
Wl Ross
Not a failure (yet) but First Reserve comes to mind.
They are an O&G focused firm that at one point was the largest energy fund around.
In 2006 they raised a $7.6 Bn fund, and in 2008 they raised a $9.0 Bn fund (which till date is the largest energy fund ever raised), but the 2006 vintage has a -9.40% IRR and the 2008 vintage has a -18% IRR.
They followed this with a $3.50 Bn fund in 2014 which has a -3.0% IRR.
Their most recent fund, a 2019 vintage, raised $0.5 Bn (~94% reduction from the 2008 vintage) and has a 15% IRR (good enough for 2nd quartile).
It remains to be seen if they raise a new flagship fund.
Similar story with many energy funds: Riverstone, Denham, and Pine Brook being some of the larger ones. None of them have raised meaningful funds since 2016.
lol ill go ahead and say it - First Reserve is a failure - they were dead in the water in 2019 and the $500mm fund is proof of that
track record is horrendous, the fund raising issues are justified by the vintage performance
There's many although I agree it's very rare for a firm to completely shut down. Off the top of my head, Paul Capital (used to be a secondaries firm), Abraaj (although that was fraud) shut down. Many firms are a shell of their former selves - Onex, BC Partners, Doughty Hanson, CCMP (I think), Prospect Hill, Terra Firma, a bunch of oil & gas investors like Riverstone, EIG. Actually, did any O&G firm other than Carnelian grow over the last decade?
Siris was a $3bn fund, now shutting down
Shutting down??
They aren’t shutting down
Ferrer Freeman & Company, Irving Place Capital, Wellspring Capital
is Wellspring dead?
Last raised fund was 2018. Not dead yet but writing is on the wall
The Gores Group
Pamplona and Novalpina in Europe
To be fair to both of them - I think pamplona was mostly backed by Russian moneh and thus blew up due to the war due to sanctions. Novalpina blew up due to the bad PR around NSO group and then the founders started fighting each other.
Evidently they are still blow-ups, just not a slow burner like Lion Capital.
Yes on botj. Google Letter One which was the family office which was a major LP of Pamplona
More venture focused but Open View was around for 2 decades, had over $2bn AUM, raised a fund and decided to shut down a month later and return 75% of the fund.
Onex is in trouble
Spoken with some junior people there, from what I’ve heard there are worse places to be
I would probably drink the kool-aid as well if i had worked my ass off to get a job there just to realize 6 months in that is a sinking ship. Simple coping mechanism, not sure i would trust what people there say.
Super helpful everyone
Seems like (if you exclude O&G) firm blowup rate is very very low. Saw another post on here about “ticking time bombs”, but I guess that really just means “slightly lower or delayed carry” as opposed to real firm risk.
PE has low barriers to entry and high barriers to exit.
How does PE - a business model that naturally requires hundreds of millions of dollars to start - have low barrier to entry, lol
Marlin has been in pretty rough shape, including the implosion of their heritage fund.
A lot of traditional energy-focused PE firms that flipped to "energy transition investors" because it was in vogue and easy to raise money for will pay the piper over the next +/- 5 years (e.g. they don't know what tf they're doing and made / are making horrendous investments)
A lot of the energy transition funds are (predictably) losing money lol
Thought energy transition funds are doing ok, all things considered. You know which ones are losing money? I guess not surprising given the amount of capital raised.
Sun Capital - heard that after they deploy their Fund VIII the firm will transition to be a family office
Riverstone
Code Hennessy
Sterling Partners
JW Childs
JC Flowers
Came here to comment CHS. C and H split to start their family office (now taking on outside capital), Promus. and S and a couple others left to do their own investing (also now taking on outside capital), Shorehill.
I think at one point CHS was the largest PE fund in Chicago.
Abraaj Group - largest PE in ME - scammers (only true bankruptcy of fund I know)
Candover Investments - 9bn London fund - voluntary wind-down after continued losses
Capvis AG - Swiss PE - closed offices after fail to raise new fund
Presumably some of the tech value funds like Marlin, Siris, and Vector are in rough shape, though does anyone have color if this is true?
Vector is doing fine. The other two not so much.
Bump
Basically any fund started between 2020-2022
What kind of question is this? There are countless examples, it’s like you don’t know the space at all
I’ve seen this happen to so many MM PE funds in London, especially in the tech & healthcare spaces
Name names so we can see how many funds each firm raised, performance, etc 🧾
Stanley Capital - very low caliber fund though
Sun Capital is dying, horrible succession planning, lots of senior turnover, switched from buyout to minority early stage checks which they don't know how to do.
OpenView was a Boston VC shop that blew up, not raising any more funds, just deploying what they have.
What ever happened to some of the lower-mm distressed / value / turnaround shops? Grey Mountain, Prophet, Insight, Resilience, etc.
deleted
Vestar
Any details on this one?
Don't think they're shutting down per se - heard that they're going to be raising a new fund soon but tons of uncertainty on the fund size and likely will be a smaller fund than current...they've had a really bumpy past so not a growing fund for sure and uncertain future
Bump. What happened here?
Hicks Muse
RIPppppp
I feel like even in the cases where a new fund doesn’t seem likely then the partners usually just perpetuate the idea of still being open. Most are decently well off so can survive without income. But it allows them to essentially just be a fund less sponsor and keep their name in the phone book
I feel like even in the cases where a new fund doesn’t seem likely then the partners usually just perpetuate the idea of still being open. Most are decently well off so can survive without income. But it allows them to essentially just be a fund less sponsor and keep their name in the phone book
Heard Abry's latest flagship fundraise has been a flop with significant RIFs and overall junior team structure reorg
THL similar boat
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