This was first published on March 20, 2020.
Editor's note: Oliver Wyman is monitoring the COVID events in real time and we have compiled resources to help our clients and the industries they serve. Please continue to monitor the Oliver Wyman Coronavirus hub for updates.
COVID-19 has infected thousands of people globally and is taking its toll on individuals, families, and economies as productivity drops and stock markets reflect increased global uncertainty. Experts are monitoring numerous items in an attempt to determine how long this could last, and how it might play out.
With supply and service delivery shocks, there will be shortages in many industries. Demand shocks are already exceeding the expected impact in some sectors such as travel and leisure. Furthermore, balance sheet and liquidity issues are emerging from these shocks. While many new deal opportunities may arise, the debt market access may prove to be problematic.
Private Equity funds face a variety of risk exposures as the situation is affecting companies across numerous industries vulnerable to an economic downturn caused by COVID-19. Oliver Wyman looked at deals from approximately 40 of the top funds since 2017 and found that more than one-third have occurred in sectors that are experiencing added risk from the effects of COVID-19. These large deals represent $110 billion.
Our latest research report shows how private equity funds can manage through these uncertainties.