NEW YORK, September 21, 2021 / PRNewswire / – New York Life Investments Alternatives in partnership with Coalition Greenwich today released a new research report that analyzes how mid-market private equity sponsors have responded to the global pandemic. The report is titled “Lessons Learned: Perspectives of the COVID-19 Crisis for Mid-Market Private Equity Promoters, “and presents research results from over 100 interviews with CEOs and partners of mid-market private equity sponsors in the United States.
“Pandemic pressure has tested mid-market private equity sponsors at all levels, but sponsors more than seized the opportunity, as evidenced by the strong rebound in deal volume in the second half of 2020 and this year. From refining their investment processes to the rapid adoption of new technologies, sponsors have quickly adapted to the new environment to best support the companies in their current portfolio while continuing to deploy capital in new transactions ”, said Christophe taylor, Head of New York Life Investments Alternatives and CEO of Madison Capital Funding.
Research has revealed that the COVID-19 pandemic has had a profound impact on the mid-market private equity industry and triggered lasting changes in key sponsor areas such as investing, transaction research, financing transactions, exit strategies and fundraising.
Key takeaways from research data include:
- Deployment of new offers: For 60% of mid-market private equity sponsors participating in the study, new deals were the most common driver of capital deployment in 2020, with complementary investments falling far behind.
- Sponsors refine the investment process: The global pandemic has forced sponsors to hone their skills and tighten their procedures, with nearly 30% of sponsors surveyed saying the crisis and the subsequent rebound have prompted them to tighten their discipline on evaluations.
- Relationships prove their value, especially in financing transactions: Sponsors surveyed ranked relationship history and flexibility of engagement as the attributes they consider most important in partner funding in uncertain market environments.
- The pandemic had a mixed effect on exits: More than a third of sponsors surveyed report delayed exits from the pandemic and extended detention periods. Sponsors report delays ranging from a few months to two years to give portfolio companies more time to meet growth expectations.
- Optimism remains among LPs: More than half of study participants believe the LP community remains optimistic about the investment climate; however, about 30% of study participants say that LPs become negative for the environment, often due to evaluation issues.
- ESG adoption continues: Three quarters of specialist sponsors and half of general practitioners surveyed state that they take ESG factors into account when making their investments. However, most have not yet established a formal ESG assessment process or integration of DCI factors and less than 5% of the sponsors surveyed are A PRI signatories.
“Going forward, sponsors remain poised to take advantage of favorable mid-market conditions following their swift and decisive actions in 2020. The flow of mid-market deals continues to accelerate as markets rebound rapidly and sponsors seek to implement record levels of dry powder. before any tax changes, ”Taylor added. “The COVID-19 crisis combined with the economic and social upheavals of the past year has not only had a lasting effect on business operations, investment decision-making and portfolio management, but has also shifted the attention from sponsors from “E” to “S” in ESG, highlighting the incredible importance of diversity, equity and inclusion in investment processes and portfolios. “
To learn more about the survey results, download the full research report here: Lessons Learned: Overview of the COVID-19 Crisis for Mid-Market Private Equity Sponsors.
Between February and April 2021Coalition Greenwich, in partnership with New York Life Investments Alternatives, conducted a study to examine the effects of the COVID-19 crisis on mid-market private equity sponsors. Coalition Greenwich interviewed 100 CEOs and partners of mid-market private equity sponsors in United States. These in-depth phone conversations focused on the impact of COVID on investment trends, exit strategies, sources of funding, and emerging challenges and opportunities.
About New York Life Investments Alternatives
New York Life Investments Alternatives LLC (“NYLIA”) is a registered investment advisor providing comprehensive capital solutions and other alternative strategies to a wide variety of institutional clients. NYLIA is made up of three highly specialized alternative investment boutiques: GoldPoint Partners, Madison Capital Funding and PA Capital, collectively managing more than $ 35 billion in assets under management (AUM) as of 07/31/2021 *.
For more information visit: https://www.newyorklifeinvestments.com/nyl-alternatives
About the Greenwich Coalition
Coalition Greenwich, a division of CRISIL, a global S&P company, is a leading global provider of benchmarking, analysis and strategic information to the financial services industry. We specialize in delivering unique, high-value data and actionable recommendations to help our clients improve their business results.
New York Life Alternative Investments
* Assets under management (“AUM”) of Madison Capital Funding LLC (MCF) include approximately $ 271 million investments in equity, mezzanine, funds and other subordinated investments and approximately $ 4.3 billion senior third-party loan assets managed by MCF. These assets are qualified as assets under regulatory management (“RAUM”) as defined in the SEC ADV form. Assets under management do not include approximately $ 265 million of RAUM consisting mainly of unfunded capital commitments to certain private funds managed by MCF. The balance of assets under management, approximately $ 8.2 billion senior loan commitments and $ 73 million of fund investments, are managed by MCF on its own account. These senior loan commitment assets and fund investments do not qualify as RAUM and, therefore, are not included in the calculation of MCF’s ADV RAUM form for regulatory purposes.
SOURCE New York Life Investments Alternatives