Listening to Guy Hands, you'd think the private equity industry is heading for a slow and putrid demise.
In an interview this week with the New York Times, Hands predicted net earnings across the private equity industry will decline 80% from their 2007 peak and that funds will struggle to raise sufficient future funds to cover their costs.
Fully embracing macabre metaphors, Hands added that private equity firms are unwilling to "restructure" [make redundancies] too quickly, and that many exist as "zombies" hoping that no one shines a light on their "corpses."
This follows a survey, which found that 47% of private equity chiefs expect investors to cut off their supply of cash.
Happily, not all those in the industry have as frightening a view of their future.
"Guy's always a bit of a doom monger, it's what he does," says one Terra Firma employee. "Returns will inevitably be lower, but a lot of places have restructured already and most people who've lost their jobs are finding opportunities at specialist start-up funds."
Brian Hamill, chief executive of search firm Redgrave Partners, agrees. "The view at the larger buyout houses is very gloomy, but there are a lot of winners in the mid-market," he tells us.
Moreover, Hamill predicts that rather than culling all the mid-ranking and junior staff they've taken on in the past few years, the larger buyout houses will reward some of them with promotion as a means of keeping them happy.
"The younger guys have carried interest in funds which are significantly underwater. The real issue is how to retain and reward them whilst also cutting costs. We're not expecting redundancies at this level, but rather the retirement of senior partners and the promotion of the mid-ranking people to the top table," Hamill says.
Abid Hussein, managing director of private equity recruitment firm AIH Advisors, says funds are unwilling to hire at a senior level for fear of diluting already depleted pools of carried interest. However, he says they're willing to hire juniors - particularly if they've got a restructuring and debt advisory background.