PE firms supporting laid off portco employees

I just finished up B school and have a month or so before joining a new PE firm as a VP. One topic I've thought about at various times is whether PE firms can / should support portfolio company employees who get laid off under the firm's ownership. I was laid off from my first job out of college and had other friends / family impacted by layoffs at various times; I know I'm not the only one in PE who's been laid off, but haven't seen this discussed much within the industry (we all know the industry as a whole gets a lot of shit for eliminating jobs).

I worked at a firm for 3 years before school, and in that time only saw "true" mass layoffs once (i.e. portco consolidating offices leading to many redundant positions rather than letting go of an underperforming manager, firing an employee for misconduct or some other one-off situation). During a board meeting, the managing partner of our firm asked the CEO what he was doing to support these employees being let go. Don't remember the details as I look back, but the part that stuck with me was the fact that the partner asked in the first place. I've since thought it would be a good thing for me to do in the future, provided I can actually be helpful to back up the question. 

So what do I mean by providing support? Certainly the portco will provide some kind of severance package, but thinking of additional things to help employees transition. An example could be referring the portco to outplacement firms, which help departing employees with things like career assessments, job market analysis, resume reviews, and interview coaching. Or referring to various recruiting, headhunting, or staffing firms depending on employee level, function and industry. Some portco's may already do some of this as a business practice, and dealing with these kind of HR issues might be too in the weeds for PE firms, but I'm sure there's ways PE firms can leverage their scale, resources and networks to help here.

Obviously any of these services cost money (and time) so wondering how this was sold beyond just being an ethical thing to do. For example, outplacement firms claim there can be positive ROI by improving retention and turnover of remaining employees, improving company brand, reducing likelihood of wrongful termination suits, etc. but all of this is hard to measure. 

Finally, since adding any additional services for departing employees may be seen as shareholder value destructive (given any ROI is hard to measure), I'd be interested to hear if and how I should even bring this up at a new firm. I don't think I'd do this right out of the gate and probably would bring it up quietly with a deal team rather than dropping this question in the middle of a board meeting.

I recognize this topic could also tie into a broader discussion of what role PE firms should play regarding layoffs, ESG, etc. and happy to share my thoughts on that but figure I'd start with more tactical questions.

TLDR: what have you seen PE firms do to support portco employees who get laid off? If I were to bring this topic up with my firm in the future, any suggestions for the best way to do so and "sell it"?

 
Most Helpful

Going to get shit for this but I don't get spending on services to help laid off employees at all; complete waste of funds and somewhat insulting to people still working there. I stopped it at a co we acquired 1st thing and I'd WAY rather allocate cash into training our existing workforce aggressively.

Spend on training has a very high correlation with churn improving. This is proven out over and over. The best part about training spend is that it's very easy to have the government compensate you for it via MEP or similar programs.  Teams LOVE it too. They all feel valued when you spend $ on training them.

As an operator, this is exactly thing kind of thing I'd be annoyed with if a PE firm sent some kid in and he suggested this.

By the way, PE might have a reputation for eliminating jobs but this is often confused with creating genuine efficiency. For example, I implemented lean manufacturing plus some automation at a company we acquired and it cut the amount of labor we need massively.

Now average pay went from ~$12/hr to ~$17/hr + health/dental in an LCOL area and we have full blown training programs running on a regular cadence for things like lean, which give workers skills they can learn and take with them elsewhere if they want.

Yes, it's less net jobs but we are able to provide better products at great prices to our customers and have higher quality jobs available.

I've never felt bad at all about firing people either but have not had to do it b/c of company performance. It's always people that are toxic and previous management was afraid to terminate or unable to recognize as underperformers. 

 

Nobis nam aut expedita et fugit tenetur. Pariatur iusto possimus laborum molestias aut et. Voluptatibus aut aut quasi enim. Est facilis hic quibusdam.

Eum voluptates in at. Maiores aut libero qui dolorum. Labore quod dolorem omnis doloribus. Et dolorem ea distinctio aut voluptatem. Quaerat saepe aperiam quis eveniet eligendi. Ut placeat vero similique laudantium at impedit sint. Enim voluptatem repellendus enim dolor et ullam dolores.

Career Advancement Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

May 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $268
  • 1st Year Associate (388) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (315) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
CompBanker's picture
CompBanker
98.9
6
dosk17's picture
dosk17
98.9
7
GameTheory's picture
GameTheory
98.9
8
kanon's picture
kanon
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”