The article discusses how the ongoing pandemic has affected 2020’s deal activity and how the 2021 landscape will likely be shaped by several key trends.
Willkie partner and co-chair of the Private Equity Practice Group Jeffrey Poss was recently interviewed by Law360 for an article examining key trends in the private equity industry to watch in 2021. The article discusses the pandemic’s impact on PE deal volume in 2020 and key trends likely to shape the landscape in 2021: an abundance of dry powder, interest in pursuing different types of deal structures, fund specialization and regulatory changes on the horizon.
In the article, Mr. Poss discussed how substantial dry powder could leave many funds all the more ready to act in 2021.
"Funds across the spectrum … continue to have tremendous dry powder to invest," Mr. Poss said. "The reality is, for most of them, they lost a quarter — some longer — where they were unable to really deploy their capital in a way that they would typically do so… These funds are anxious to put that money to work, their [limited partners] are anxious to put that money to work and ... any good news on the economic horizon is really going to open the floodgates.”
In examining how some PE firms are embracing different deal types, Mr. Poss discussed the growing trend of co-investments and their popularity among limited partners, noting that in some cases, during their usual fundraising, funds are setting up separate co-investment funds alongside the main fund, so that that capital is ready to be tapped should a promising deal arise.
"The impact of this and of co-investment generally is that funds are able to bid for larger deals than they may otherwise be able to do simply by tapping capital from their existing fund," said Mr. Poss.
“5 Private Equity Trends To Watch In 2021,” can be found here. (subscription required)