Over the past year, new ways of working and doing business emerged for private equity (PE) as it is for any other sphere of business. And, initially, it looked like the economic devastation wrought by Covid-19 would hit global private equity markets incredibly hard. But after falling off a cliff in April and May, deal and exit value snapped back vigorously in the third quarter.
One major difficulty for PE investors, especially when lockdowns were at their hardest, was the inability to get on-site and visit businesses that had investment potential. A company might look great on paper, but you get a much better feel for its viability by visiting the premises and seeing how it operates on a day-to-day basis.
Despite the massive ructions of 2020, there are still some fundamentals that haven’t changed. Certain industry trends may have changed but, in most cases, a good business with a good leadership team remains a good investment. Private equity funds and their investors would do well not to get caught up in a panic and take a long-term view of the companies in their portfolios.
Source: Funds Europe
