Deal-doer confidence in central Europe higher now than in 2008, says Deloitte
Central Europe’s private equity markets are feeling the impact of Covid-19 – but there is more optimism than during the 2008 Global Financial Crisis, suggesting the experience the region’s deal-doers have accumulated may buoy investments and create a basis for new deals, according to the latest Deloitte Central Europe Private Equity Confidence Survey.
“Given the ongoing uncertainty which lingers over markets, as well as the omnipresent element of the Covid-19 crisis, we can only hypothesise that these current expectations are buoyed by one variable which was less present in 2008: experience,” says Mark Jung, partner at Deloitte.
Though the index is at its lowest level since the 2008 global financial crisis, its slide was more gradual than 12 years ago. “The GFC was most CE deal-doers' first crisis. These investment professionals have built up significant experience since then, and this will make them much better placed to navigate the coming months. Simply put, the battle-hardened may be better able to keep a steady hand, identify opportunities – and capitalise on them”, said Jung.
The pandemic is creating a buyers’ market, with 74 per cent believing 2020 will be a good vintage, the survey said. Nearly half of respondents believe vendors have decreased their price expectations over the last six months, and just over half (51 per cent) believe they will continue to do so.
Most expect deal sizes to stay the same or decrease, and perhaps for this reason, nearly half (45 per cent) expect to focus on new investments in the coming months, a slight decrease from the last Deloitte Survey.
“With many GPs in CE well capitalised, their financial support combined with human capital by way of expertise in supporting growth across cycles can be a powerful force in helping many companies in the region to recapitalise and emerge even stronger from this time,” said Jung.