How is BC Partners Managing Human Capital Risk at its Portfolio Companies?
November 23, 2020
Private equity firm BC Partners is already among the larger private equity firms by total number of portfolio company employees, with nearly 250,000 employees at companies it owns globally. With portfolio company GardaWorld’s proposed acquisition of competitor G4S (530,000 employees), that number could more than triple, to nearly 780,000 employees. This would likely make BC Partners the largest private equity firm in the world by portfolio company employees.
Our new report, “How is BC Partners Managing Human Capital Risk at its Portfolio Companies?” is available here (link).
In the midst of the COVID-19 pandemic, a significant majority of employees at BC Partners’ companies are essential workers. Working in industries such as retail, security, and waste disposal, these employees are unable to work remotely during the pandemic and in many cases work in environments where they are at risk of COVID-19 infection and of infecting coworkers or customers. Despite being considered essential, employees at BC Partners’ portfolio companies may face low wages, lack of access to affordable health care, and inadequate sick leave or family leave.
A review of BC Partners’ portfolio suggests the overall number of employees at the private equity firm’s portfolio companies has grown dramatically in recent years.
At the same time, the firm’s failure to respond to or adequately address human capital concerns at its existing portfolio companies raises questions about its ability to do so with three times as many employees.
Key points:
- BC Partners is already one of the largest private equity firms globally by portfolio company employees, with around 250,000 employees at its companies.
- If portfolio company GardaWorld’s proposed acquisition of competitor G4S is successful, BC Partners’ portfolio companies would have around 780,000 employees globally, making it perhaps the largest private equity firm by portfolio company employees.
- In the midst of the COVID-19 pandemic, a significant majority of employees at BC Partners’ companies are essential workers, working in industries such as retail, security, and waste disposal. These employees are unable to work remotely during the pandemic and in many cases work in environments where they are at risk of COVID-19 infection and of infecting coworkers or customers.
- BC Partners’ failure to respond to or adequately address human capital concerns during the pandemic at its existing portfolio companies raises questions about its ability to do so with three times as many portfolio company employees.
- At portfolio company PetSmart/ Chewy (68,000 employees), BC Partners has not responded to employees’ request that the retailer provide adequate personal protective equipment (PPE) and hazard pay to those required to work, and severance pay to employees that are laid off despite collecting billions of dollars of dividends from the retailer.
- In August, PetSmart drew media attention for firing a Black employee for a wearing face mask calling attention to Black Lives Matter movement and institutional racism. The termination was later rescinded.
- While portfolio company GardaWorld (102,000 employees) is a newer BC Partners portfolio company (acquired October 2019), existing human capital issues raise questions about how BC Partners evaluated these issues when conducting due diligence on the acquisition and what steps it is taking to address them.
- In March, the Tampa Bay Times released a yearlong investigation into GardaWorld Cash Services that highlights numerous safety issues at the company.
- Since 2016, GardaWorld affiliates have been fined for dozens of workplace safety and health violations by the US Occupational Safety and Health Administration (OSHA), including multiple “repeat” and “willful” violations.
- GardaWorld has recently paid millions of dollars related to class action lawsuits by employees alleging wage and hour violations. It faces additional suits from employees that are ongoing.
