Though private equity funds have experienced difficult times worldwide over the past months, optimism predominates among investors, half of whom even expect the growth of their revenues in the coming 12 months. Though the situation surrounding the Covid-19 pandemic has made it difficult to conclude new transactions, almost three-quarters of financial investors (74%) are open to new investments and are not considering stopping them in the near future. This follows from Mazars’ international study “Covid 19 and the world of private equity”, oriented primarily on European investment funds.
In spite of the challenges on the market, which the pandemic has hit hard, there is optimism and a certain degree of “resilience” of private capital evident among the surveyed investors. “They will continue to make quality transactions and the investors will also try to complete them in the period of the overall slowdown in trade flows. Crises favour those who are prepared, and those who are well-informed will prosper,” the head of Mazars CR M&A, Lukáš Hruboň, expects.
A second group of investors in the area of private equity expect a decrease, which is not, however, a reason for pessimism and bleak scenarios. A slight drop in the revenues of up to 10% over the next 12 months is anticipated by 17% of investors. Only 2% of investors expect a serious slump under 50% in their income.
“In addition to the three-quarters of investors who are not considering any interruption of investments, there is a large group that believes that the fluctuations are only short-term. During the next half a year, the worldwide COVID-19 pandemic will be the cause of the suspension of new investments in only 19 percent of the cases. Only an absolute minimum of investors anticipate investments will be stopped for a longer period,” stated Mazars’ global Head of Corporate Finance Stephane Pithois.
“The larger funds are more optimistic overall. The surveyed funds point out that the crisis will differ according to the individual sectors and will primarily hit hotel operators and the tourist trade,” added Lukáš Hruboň.
On the other hand, the crisis offers new opportunities. According to Mazars’ experts, a wave of purchases awaits the market for the purpose of the stabilisation of the financial situation of companies affected by COVID. This wave will begin in the autumn of 2020, when the real effects of the measures regarding COVID will most likely appear together with their counterweight provided by the public budgets. In this period new opportunities will arise for investment, according to 66% of private equity funds. This phenomenon is the result of the mood of the investors, who are willing to re-evaluate their investment strategy applicable under normal market conditions and to support their portfolio of funds in opportunities for acquisitions.
Mazars’ experts also asked the representatives of investment funds about how the pandemic changed the conclusion of transactions. The majority (88 percent) claim that the conclusion of transactions will also be possible in the “home office” environment, while two-thirds also report that this will be more challenging.
Mazars is an international, integrated and independent organization specialising in audit, accountancy, tax, and advisory services. The company operates in 91 countries of the world. The organisation employs more than 24 400 experts, who help large international organisations, small and medium-sized enterprises, private investors and public bodies in all phases of their development. Mazars has been operating in the Czech Republic since the year 1995, providing comprehensive services and employing 250 people. www.mazars.cz – www.linkedin.com/company/mazars-esk-republika - www.facebook.com/mazars.cz