Are PE-owned firms a better choice for hard times?

9 July 2020
| By Oksana Patron |
image
image
expand image

Private equity-companies have some structural advantages that allow them to navigate crises better as they have access to equity and debt capital from their sponsors, expertise from managers and active owners, according to Willis Towers Watson.

The firm, which surveyed several of the private equity managers at the end of Q1 2020 to understand how their businesses were performing and what their expectations were for the next 2-3 months, found that while the first half of the year saw market volatility and a subdued environment for exit deals, investors should not forget that managers maintained significant flexibility over the timing and terms of company exits.

“So far, we have seen little evidence of forced exits into a depressed market and long-term investors who are patient can ride out any short-term volatility,” the firm said in a note.

“Strong, cash-generating businesses are typically favoured by our managers and we focus on those with strong operational skill as this is a key tool to add value.”

As far as sectors were concerned, technology, healthcare and consumer staples were the areas still worth capital deployment, despite the short-term dislocation.

At the same time, long-term PE investors should remain disciplined and continue to deploy capital in line with their programmes and investors considering the asset class could be facing one of the better periods to invest in the past decade.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 1 hour ago