How the Pandemic Changed Everything in Private Equity

The pandemic wreaked havoc on the world and on business.

If there was a silver lining, the resulting paralysis and hardship in many industries taught important lessons. Some of those lessons were evident in the 2020 Emerging Manager Report, published by Buyouts in partnership with Gen II.

The survey, which polled more than 100 fund managers and 60 institutional investors, illustrated the trepidation that existed during the pandemic’s low point among LPs. Almost 90% of emerging managers said they believed the pandemic and international lockdowns would increase the difficulty of raising funds at least moderately.

Likewise, 66% of emerging managers who planned a fund launch said they decided to delay fundraising and 7% indicated they planned to abandon fundraising indefinitely.

Those emerging managers surveyed who had recently closed a fund were required to meet with an average of 97 investors in order to do so — at an average of six meetings per commitment.

The good news

Despite the bleak outlook held by some during that period, the demand for first-and-second-time funds remained high. Nearly 90% of institutional investor respondents reported that they would still back these vehicles. A similar percentage (91%) of managers said they expected to become more active in dealmaking to take advantage of low asset valuations.

Learn more about what LPs and how fund managers navigated the pandemic in our comprehensive report: Emerging Manager Report – 2020.