One phrase heard often these days in (video) conversation with private equity professionals is, “We have been expecting a downturn for a long time—just not this one.”
Of course, the havoc that COVID-19 has wrought on lives and livelihoods the world over is much more than a downturn; it is a global crisis whose human toll is yet to be understood, much less accounted. But it is also an economic downturn. This raises the question: To what extent are the lessons of previous downturns relevant?
The private equity (PE) industry is still fairly young, though old enough to remember 2008. We looked briefly at two aspects of how the industry confronted the last economic downturn for hints on what may drive value in this one. In brief: operating groups appear to matter; and “buying low” is great, if you can.