PE market remains healthy for COVID-unaffected companies

The appetite for capital and investment remains strong, although deals require more equity now than pre-pandemic, fund managers say.

Companies not affected — or even made better — by COVID shouldn’t have any trouble attracting investment by private equity (PE) firms at relatively strong valuations. However, there is slightly less leverage available today, investment specialists said.

“We are seeing very minimal change in valuation,” Steve Rodgers, managing director of Morgan Stanley Capital Partners, said in a webcast hosted by Dechert LLP. “The only companies that were impacted that are coming to the capital markets are those that really need to raise capital. So, those are going to be at distressed valuations.”

Those that don’t have to sell, said Rodgers, are smart to wait “until there’s more clarity how [the economy] recovers.”

Global merger and acquisition (M&A) deals so far this year are down 41% by value and 16% by number, said Markus Bolsinger, a partner with Dechert, citing Refinitiv data. PE-backed buyouts are down, too, 24% by value and 8% by deals.

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