Private Equity and the COVID-19 Economic Downturn: Opportunity for Expansion?

The global private equity industry, with almost $4 trillion in assets under management, faces its biggest challenge to date with the coronavirus pandemic, which has shuttered large parts of the economy, caused stock markets to contract significantly, and raised economic uncertainty. The global lockdown of businesses, employees, and consumers appears to represent an extraordinary demand shock. Neither the speed nor scope of the economic shock caused by the coronavirus outbreak has a historical precedent. The resulting economic and financial dislocations are creating shockwaves that have left no industry untouched, but with especially severe effects on industries such as hospitality, entertainment, and energy. Economists are predicting a Great Depression-era like slump, with U.S. gross domestic product expected to contract nearly 11% during 2020 (National Bureau of Economic Research) and unemployment potentially running as high as 30%.