Insights
How can private equity make the most of a downturn? Top takeaways from our webinar with Moonfare CEO Steffen Pauls
Moonfare CEO Steffen Pauls talks about various ways that private equity can overcome and in some cases take advantage of a broad-based economic downturn.
Written by Sean Lightbown, Jason Feder
July 1, 2022
Fears of a pending recession have gripped investors this year. A combination of rising interest rates, inflation and stumbling economic activity have fed concerns that a downturn could be imminent, with the steep fall in public equity markets a stark demonstration of sentiment. And while private equity as an asset class has shown some resilience to economic shocks in the past, worries persist about the correction in multiples and potential valuation haircuts. But what are the opportunities in this environment?
Earlier this week, our CEO Steffen Pauls hosted a webinar to discuss the various ways that PE can overcome and in some cases take advantage of a broad-based economic downturn. He also looked back on his private equity career through the lens of previous recessions, and took time to answer questions from our audience.
Key points covered included:
- Given their role as active owners, private equity managers can work with portfolio companies at a frequent cadence to aid them through tough economic times, both through good governance and capital provision.
- The PE industry ‘reinvented itself’ during and after the great financial crisis, broadening their capital basis and putting an emphasis on value creation for portfolio companies.
- The restructuring of several industries globally given the sharp change in macroeconomic conditions could provide a compelling opportunity for managers with a clear understanding of how value chains will operate going forward, particularly at lower buying multiples.
For more from Steffen, please check out our video below:
Important notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.
Authors
Content Manager
Sean Lightbown
Sean is a content manager at Moonfare, working with stakeholders across the business and wider industry to help produce thought-provoking content across blog posts and white papers. He has over a decade of experience in financial writing and editing, specialising in fixed income, venture capital, private equity and M&A. Sean holds a BSc in Politics with Economics from the University of Bath.
Senior Legal Counsel
Jason Feder
Jason is a member of Moonfare’s legal team, with experience in financial regulation and white collar litigation. He holds a B.A. from UCLA and a J.D. from Indiana University.
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- 2 Source: McKinsey "Private Markets Annual Review 2022"
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