Private equities expect further decline in revenues but lower than in 2020

According to Mazar’s report ‘Covid-19 and the world of private equity’, the majority of respondents expect revenue from their portfolio companies to fall over the next 12 months, which is consistent with the sentiment at the start of the pandemic.

“30 percent of respondents expect a fall in revenue of 11-25 percent, compared to 50 percent in our first survey. In addition, 40 percent of respondents noted that they expect a decline in revenue of 0-10 percent, compared to 17 percent in the first survey. This implies that the overall sentiment has improved with more participants expecting a lower decline than in the prior year. However, the real question from this is whether this means a lower drop in revenue is expected overall, or whether the percentage decrease is simply lower due to a decline in revenue has already materialized in the prior year,” the report reads.

Unsurprisingly, the survey highlights that levels of optimism are largely sector-dependent. For example, a number of respondents commented that they expect their travel and hospitality assets to continue to be adversely impacted in the short to medium term.

The authors of the report said that the private equity community has become accustomed to working in this ‘new normal’. 

“Although private equity investors continue to face a challenging environment, this survey has confirmed and reinforced a sense of optimism across the private equity community. After the shock of the first lockdown period, investors have again exhibited their resilience and capability to adapt to the uncertain environment,” they said.

(WBJ)