Private equity (PE) activity ground to a sudden halt in the second quarter of 2020 as the reality of Covid-19 became apparent. But the industry quickly regained its footing and demonstrated an extreme resilience. Deal and exit value snapped back vigorously in the third quarter, ending the year eight per cent higher compared to 2019 levels. By all indications, PE weathered 2020's perfect storm without taking a hit to returns, as valuations remained very high.
One number that stood out was the number of deals transacted by PE firms, which was down by 24 per cent (about 1,000 deals) in 2020 from recent levels meaning that total investment value was supported by larger deals. 2021 deal markets promise to be incredibly busy as investors seek to make up for lost time. Looking at January 2021 data, deal value is 184 per cent higher than the averages seen for that given month in the past five years. Funds will have now more than ever before to differentiate and make bold moves.