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Alternative Market Briefing

Private equity banks on recovery in 2021

Thursday, October 01, 2020

Bailey McCann, Opalesque New York: New data from accounting firm BDO suggests that private equity fund managers are banking on a significant recovery in 2021. BDO's Private Capital Pulse Survey is a survey of 100 private equity fund managers and 100 venture capital fund managers at firms in the United States. According to the report, 74.5% of GPs expect that the economy will be "better" to "much better" in 2021. But don't let the rosy outlook fool you, there are still many obstacles impacting private equity over the near term.

GPs are taking steps to ensure the safety of their staff and the resiliency of their businesses. 55% of respondents said they were working on a business continuity risk assessment by making changes in forward-looking valuation metrics and activating a crisis response task force. A further 36.5% of firms said they were considering applying for a government loan.

Deal flow has also been impacted by the length of the pandemic. Just 23.5% of fund managers say they will direct most of their capital toward new deals or investments in the next six months. That represents nearly a 20% decline from BDO's last survey released in December. "Deal flow will remain comparatively muted for the balance of 2020, but, in line with industry expectations, we believe M&A will pick up as the economy turns around in 2021," said Scott Hendon, National Leader of Private Equity at BDO.

Much of the new activity will be focused on distressed assets. Last winter, ......................

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