DEAD IN THE WATER

HUNDREDS OF PRIVATE EQUITY FIRMS ARE NOW DROWNING IN A SEA OF COMPETITION, SEARCHING FOR LIFEBOATS OF NEW CAPITAL AS THEY CLING TO PORTFOLIOS OF NEARLY UNSALEABLE INVESTMENTS. MEANWHILE, THEIR INVESTORS ARE LOSING PATIENCE.

- HANK TUCKER

ITS MOST RECENT FUND, Vestar Capital Partners VII, launched in 2018 with $1.1 billion but has been limping along with an internal rate of return of 7.7%, significantly lagging the S&P's average return of 14% over the same period.

Vestar was born in 1988 during private equity's first boom, the same year a brash NYC firm known as Kohlberg Kravis & Roberts took down mighty RJR Nabisco for $25 billion ($70 billion in today's terms), back when deals were called LBOs and dealmakers were known as corporate raiders. A lot has changed since then. With more than 15,000 firms worldwide and $9 trillion in global assets, private equity is now mainstream. Vestar's founders were bankers at First Boston who left to specialize in buying and selling companies like red plastic cup king Solo and Big Heart Pet Brands, known for Milk-Bones. One of their best deals: the $175 million purchase of Birds Eye Foods, sold in 2009 for $1.3 billion.

But now Vestar is looking inward to 12 companies it picked up over the last 13 years, including veggie food brand Dr. Praeger's, frozen berry processor Titan and PetHonesty, maker of alternative medicines for pets. Vestar hasn't invested in a single new portfolio company since 2023, and it announced the sale of only one in 2025, unloading cracker maker Simple Mills, in which it bought a stake in 2019, to Flowers Foods Inc. for $795 million.

In an industry built on the constant churn of buying and flipping companies for a profit, Vestar's future is in question. Its assets under management have withered from $7 billion 15 years ago to $3.3 billion as of its latest SEC filing in 2024. Vestar declined to comment for this story.