Evolving Changes in the PE Industry Post-pandemic: An Overview

Businesses across the world were totally unprepared for the pandemic. The pandemic brought many changes to industries, life, and activities of the people in general. Considering the private equity industry here, the coronavirus pandemic forced the industry to change the way they operate, manage the portfolio companies, and risk-taking ability. The digitalization process took its speed as companies were forced to go remote overnight. Further, the industry started reshaping itself from underwriting, due diligence to technology innovation.

Let’s understand the changes and efforts of adaption by the PE industry during and post-pandemic here.

Under the influence of the pandemic, the PE exits halted to a greater extent. They became cautious about their investments, cash flow estimates, or gauging the market value of an investment. Due to dry powder in surplus and revisiting of strategies, PE bounced back from a slow-to-zero economy to a full-fledged business.

A few of the common strategies and actions were taken by the industry for their portfolio companies include:

• Management of inventory
• Management of cash flow
• Review of bottlenecks
• Monitoring of cash balance
• Revisiting payment terms
• Building digital capabilities
• Sharing best practices
• Sizing of the operating models
• Management of supply chains
• Building of data and analytics capabilities
• Maintenance of business continuity
• Securing finance

Also, some of the PE industries started crisis-management hubs and had leaders in place across the portfolio companies to provide the necessary support. A few of the PE firms adopted a wait-and-see approach for new plans of investment.

Though there were few changes in deal closure during Q1 2020, the PE firms started investigating the COVID-19 effects on potential investments, and the deals for business and consumer-facing companies were put on hold.
To mention a few deals here –

• In order to finance the restructuring initiatives, Coty Inc., the US-based beauty company sold shares to KKR worth USD 750 million.

• To strengthen the liquidity position, Apollo Global Management and Silver Lake Partners provided USD 1.2 billion as the ‘anchor funding’ to Expedia Group.

• To fortify the balance sheet, KKR purchased USD 500 million worth of convertible preferred shares in the US Foods Holding Corp.

Also, the impact of investing and ESG surged to the highest level possible. The trend would continue in the coming years as the regulatory forces put sustainability as its priority for business and investment decisions.

Considering all these things, there was a rise in demand for private equity professionals with specialized skill sets who can get into the technical details, product details, and design strategy. Many firms have started concentrating more on a data-centric model for executive search. Private equity firms now look for candidates with a new eye.

PE firms are determined to increase the representation of women and concentrate on diversity and inclusiveness. They may follow hiring targets and quotas to nurture the upcoming generation with required entrepreneurship and mentorship programs. Also, they are looking for marketers who can build and manage relationships through a virtual interaction putting full stops to conference rooms or hotel ballrooms by traveling around the world.

Private equity firms are expanding their remote technology and back-office infrastructure by adding VPN access, extending help-desk hours, adding telehealth services, and improving virtual training.

If choosing a private equity career is your destination then this is the best time to put your foot on the door. Upskill yourselves with the new skills and technology the industry is looking forward to in its new marketers, deal makers, and other professionals at the front, middle, and back-offices.

Taking up private equity certifications or courses would help you to step up your career ladder sooner and in a competitive manner. Walk your way toward the changing industry scenario with full preparedness and witness success.