You can’t do private equity by Zoom. That’s the view of Michael Psaros, co-founder of $13.5 billion private equity firm KPS Capital Partners.
Forget flexible days, don’t even think about remote work and please don’t mention video calls.
KPS, which invests in manufacturing companies, has required all its New York staff to be in the office five days a week since early September, provided they’re vaccinated. It’s the only approach that makes sense in the buyout world, according to Psaros, a former Bear Stearns banker who noted that most employees had already returned by June.
“I’m sure flexible work is good for certain industries, but not in private equity,” Psaros, 54, said in an interview. “Private equity is an apprenticeship and relationship business, and you cannot apprentice by Zoom. You cannot learn by Zoom.”
While some Wall Street firms have been requiring key staff to show up at the office every day for at least a year, KPS’s demand that everyone do so makes it an outlier.
“You cannot compare the buzz and energy of everyone being back in the office working together, in conference rooms and walking around hallways, to a hybrid or remote workforce,” said Psaros, whose 82-person firm has offices in New York, Amsterdam and Germany. “Until we were all back, I had forgotten about the magic of working together in person.”
Not that working remotely during the early part of the pandemic slowed down KPS.
The firm, known for taking its time deploying capital, has been investing at a record pace. Since June 2020, it has completed or announced 11 deals with a combined enterprise value of roughly $8.5 billion — the most since Psaros helped launch KPS three decades ago.
It’s also benefiting from a booming capital-raising environment, gathering $6 billion for its fifth special-situations fund and $1 billion for a pool focused on mid-size companies in 2019.
“The opportunities in the market were so compelling that we basically were able to deploy within a year approximately one-third of our mid-cap fund,” Psaros said, “as well as over one-third of our flagship fund’s capital.”