PRIVATE MARKETS IN DOWNTURNS: 3 OBSERVATIONS

Defining the optimal set of actions in coping with COVID-19 induced shocks requires all private equity stakeholders to address some major questions, such as the effect of public market contraction on private market valuations, how the typical private equity portfolio industry composition looks in relation to falling demand and production across various sectors, and what the emergency economic relief policies are in countries where portfolio companies are incorporated.

To understand some of the processes, we can build on lessons drawn from previous shocks, from the early 2000 recession and the aftermath of the Global Financial Recession in 2008-09.

This report leverages market data to address three major questions:

  • To what extent has the loss in value on public markets spilled over to private market valuations?
  • Are there any patterns in the cashflow behavior during and around downturns?
  • From the market timing perspective, how do downturn and post-downturn vintage years perform?

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