The COVID-19 pandemic has tested the Private Equity (PE) industry in ways not seen before, handcuffing their ability to pounce as investors everywhere remained cautious or complacent. But as the situation begins to stabilize, we expect PE firms will enthusiastically reengage and help lead the recovery, applying their historic expertise and value-creating capabilities to stand companies back up and position them for long-term success.
A new perspective, Post-COVID private equity: Thriving in a bifurcated world of opportunity , and accompanying podcast series, looks at how PE firms are shifting their focus to preserve the value of companies in their portfolios and how they are working to strengthen relations with their limited partners and lenders and preparing for an avalanche of investing opportunities.
We see significant opportunity for private equity because of all the dry powder they have accumulated, plus all the stressed and distressed funds that have been raised—all of which will be ready to pounce. We further expect great M&A activity coming out of COVID as it will be necessary for many companies to find liquidity options if they don't have a robust business going forward or in a sector that remains in favour.
-Robert Olsen, Global Financial Advisory Deloitte Private Leader
Episode #2: An Asia Pacific perspective with Dwight Hooper (speaker) and Greg Jarrett (interviewer)
I had a Private Equity client say to me the other day that they wouldn't consider buying a company again that was not on the cloud and able to operate virtually in case something like this happens again in the future, or at the very least, price putting that technology in place into the valuation of the deal.
– Dwight Hooper, Lead Partner, Private Equity, Deloitte Asia Pacific
Episode #3: An Australian perspective with Aaron Black (speaker) and Greg Jarrett (interviewer)
In a post-COVID world with an expectation of a very long period of low-interest rates, we expect limited partners to not be requiring quite as high returns. That means that whilst we do think that private equity returns might come down as a whole, we certainly think that they'll continue to remain very attractive compared to other asset classes. Certainly, the equity markets have had a very strong rally from their March lows, but expectations moving forwards is that private equity can continue to outperform as an asset class.
– Aaron Black, Head of Private Equity, Australia
Episode #4: A UK perspective with Richard Parsons (speaker) and Greg Jarrett (interviewer)
The big difference between this year and 2009 was that during 2009, both the market paused in terms of taking businesses to market, but also private equity took their foot off the gas in terms of their appetite to invest. And a number of them spent 12-18 months without having done a transaction. Now, if you're a private equity fund and you're investing a five plus five fund, you need to keep deploying capital.
– Richard Parsons, Head of Private Equity Coverage, UK