Private equity firm Carlyle is cutting 10 per cent of its staff in the latest indication that buy-out firms will not be immune to the meltdown in the markets.

While Carlyle is the first major firm to take such a drastic step to cut costs as a result of the economic downturn, it is unlikely to be the only one. The core business of private equity firms in recent years – taking ever-larger public companies private – came to an abrupt end when the market for cheap debt to pay for such mega deals disappeared. Carlyle’s staff cuts, which total 100 people, brings the firm back to where it was in early 2007.