The largest private equity funds have enormous amounts of cash to invest, but face portfolio company defaults. Alan Johnson, head of the compensation and consulting firm, said PE outfits benefit from leverage when markets are up. “Now they’re on the other side of leverage and it hurts,” Johnson told Institutional Investor.

“I won’t have a charity benefit for these people. They’re down 10 percent from the top of the mountain,” he pointed out…

“We have been pleasantly surprised at how companies can run efficiently and remotely. But asset managers have found they can operate with fewer people,” said Johnson. “We’re seeing that asset management and the U.S. economy can run a lot more efficiently. Working remotely exposed things like our long commutes. New York City hasn’t changed since the 1950s when it comes to commutes. Now we know we don’t need that. But then it also shows you don’t need as many people as well.”

Johnson expects many of the layoffs to disproportionately affect people of color. That’s because lost jobs will be in areas like operations and technology, many of which are held by Black and Hispanic professionals.

Institutional Investor / August 10, 2020