- 2020 is expected to be a good vintage, with falling prices creating a buyers’ market
The survey results also indicate a noteworthy proportion of believers in a quick economic recovery, as 13% of respondents actually expect conditions to improve.
The pandemic is creating a buyers’ market, with 74% of the survey respondents believing 2020 will be a good vintage. Nearly half (45%) of them believe vendors have decreased their price expectations over the last six months, and over half (51%) believe they will continue to do so. As a result, the proportion of PE firms expecting to focus on new investments in the coming months remains relatively high, of 45%.
"Although they are walking on moving sands, most of deal-doers have also gone through the 2008 financial crisis and many of them are well capitalised, which can help them navigate this period of uncertainty. As any crisis, the current one also offers opportunities to those players who are positioned well enough to take risks. This is why almost half of the CE private equity houses are interested in fresh investment partnerships, either to benefit from the fact that valuations are coming down or to generate more value in the existing portfolios through add-ons. There are various such situations that were announced in Romania since the beginning of the year in various industries: recycling, manufacturing, services, technology etc.," said Radu Dumitrescu, Financial Advisory Partner-in-Charge, Deloitte Romania.
In terms of deal sizes, most private equity houses expect them to stay the same (58%) or decrease (43%). Also, 62% of the survey respondents expect liquidity to decrease over the coming months.
The survey results also show a steep increase in the proportion of respondents who feel the efficiency of their CE financial investments will decline, the second-highest percentage in the survey’s history, after the one reported in the autumn of 2008. Nearly a third (30%) expect efficiency to decline, up from just 6% in the previous survey and 0% a year ago.
Deloitte Central Europe Private Equity Confidence Survey has mirrored the private equity market evolution since 2003, twice per year. The latest edition is available here.
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