Corona Crisis Creates Private Equity Valuation Challenge

April 3, 2020

Coronavirus crisis creates private equity valuation challenge

Canadian finance publication, Wealth Professional, investigates how private equity valuations can be impacted during a crisis.

They report that with typically long lock-in periods and high investment minimums, alternative investment funds have traditionally been desirable for a number of reasons. But now in the world of private equity, that assumption is being put to the test. A potential problem for PE investments is the fact that deals typically involve high amounts of leverage. Drawing from data from Burgiss Group LLC, one estimate from MSCI last week held that the value of large U.S buyouts had dropped 35% from their first-quarter peak.