Coronavirus has emerged as the biggest catalyst to promote economic volatility in the private equity sector in 2020, since the great economic recession of 2008. The virus outbreak has now become a huge humanitarian challenge, and the biggest irony of the ongoing times, for governments and businesses around the world is – whether to save people, or the crumbling down economy?
The damage been done to the world economy by the virus-spread is palpable now. Businesses of every shape and size have been adversely affected around the world, especially the US. The downturn that the private equity professionals are witnessing at the moment has come after a decade-long period of growing transactions, fundraising, and valuations.
The Scope of Embarking on a Private Equity Career is Really Slim
Amid the COVID pandemic, those having completed their graduation in finance in 2020 will need to wait a year or so to secure their first private equity job. At present, it’s close to impossible to get opportunities in the PE sector in the US. Better is to gain skills, or private equity qualifications that will come handy while you get interviewed the next year, when there emerge job openings in finance.
What Adjustments PE Firms Need to Make Amid the Ongoing Crisis
For a majority of experienced PE investors, a crisis like this is not a complete ‘never-seen-before’ like situation, however, nobody has ever seen circumstances as grim as what they are rite now.
Here are the 3 kinds of adjustments every PE firm head, or CEO, needs to make:
Ensuring Employee-Well being
Private equity investment professionals, that are also the owners of the different PE firms located across the globe, need to ensure that their staff is comfortably being able to take care of their personal, as well the family’s health in such times. The disease is not sparing anyone, be it young, old, child, or infant. And hence, the PE Firm owners must consider health of their workforce, to be of paramount importance.
Firms in the financial sector in the US are working heavily on the advancement of their remote communication technological infrastructure. In the same context, new remote communication software are being bought, or is being subscribed to, by the employers in the private equity sector.
The other measures being taken by PE firms in the wake of the spreading pandemic comprise extending help-desk hours, focus on skill-specific and industry-relevant virtual training of the workforce, and offering of telehealth services as a benefit.
Critical Business Processes Must Function Unhampered
Private equity firms need to maintain the constant upkeep of crucial business functions running. They must perform the critical business tasks continually, which involve assessing the investment pipeline, managing essential processes via videoconferencing, and conducting investment-committee conversations.
Moreover, firms in the private equity domain also should ensure that they are periodically conversing with the leaders of their portfolio companies through video communication channels. Review, and board meetings, can be organized virtually from time-to-time to keep the flow of things in control.
Not every industry has been affected the same way in a PE Firm’s portfolio. Different portfolio firms belong to different industries, and hence, it becomes essential to prioritize your assistance-approach towards your portfolio firms in these gloomy times. The firms worst affected by the pandemic must be addressed first. Mostly, these are the ones belonging to industries hit severely, such as travel, e-commerce, manufacturing, and retail.
A few of the portfolio firms may be a part of the front line response industries in the times of the ongoing pandemic. Here, as a PE firm, your humanitarian responsibility increases even further, as you become a part of the direct support in the cause of fighting against the deadly virus. If any of your portfolio firms belong to industries such as healthcare and essential commodities, do make sure that their logistics and supply chain are performing at their optimal work standards.
Having been able to make the above-provided adjustments, we hope that a large number of PE firms recover their monetary losses quickly, when the economy revives.