January 5, 2021
Private Equity: PE Funds On the Hunt for Deals in ’21
The results of this Lincoln International survey of more than 150 global private equity investors indicate that they have plenty of dry powder & their top priority in 2021 is deploying it. Here are some of the survey’s key findings:
– 88% of respondents said that their top priority in 2021 was deploying capital. Last year, 79% of respondents identified this as their top priority.
– 5% of 2021 respondents identified completing portfolio company exits as their top priority, while 2% said that helping portfolio companies navigate the economic downturn and pandemic implications topped their list.
– 89% of respondents expect to be more active in buying rather than selling portfolio companies in 2021, compared to 82% last year.
– Reflecting the continued economic uncertainty, 68% of respondents plan to heighten their focus on the quality of portfolio company management teams, 59% plan to hold portfolio companies for longer periods, and 43% expect to continue to focus on the liquidity of portfolio companies.
Despite last year’s challenges, the survey says that PE investors deal volume to increase in 2021, with 50% expecting volume to increase slightly & 27% expecting it to increase meaningfully. When it comes to valuations, 58% expect them to remain relatively stable, while 32% expect them to increase slightly.
The survey concludes on an optimistic note, observing that, for the last several years, investor dread of a cyclical market contraction has cast a shadow. But now that this dreaded contraction has occurred, deal making has snapped back “at a rate that no one could have anticipated.”
– John Jenkins