The PE Market Rebound and the Rise of Supply Chain Pressures
Welcome to the December 2021 edition of PErspectives—our periodic publication featuring news, trends and legal developments in the private equity (PE) industry. In this issue, we look at 2021 and beyond as we examine the impact of global supply chain shortages on PE firms and their portfolio companies in an era of rising inflation and interest rate hikes.
The PE industry enjoyed a remarkable surge in fundraising, exits and new deals in late 2020, continuing at an even stronger pace in 2021. This activity comes at a time when economies around the world are still grappling with the effects of COVID-19 and demand for commodities, goods and skills has intensified, putting pressure on supply chains and logistics.
With a view to how markets are impacting PE stakeholders in various industries and geographies, we explore these and other probing questions:
- What are the drivers behind PE’s rebound and challenges for the asset class in the year ahead?
- What impact will supply chain pressures have on deal appetite among PE firms, and which sectors have been most directly affected?
- How are PE firms assessing supply chain risk, and what is the effect on valuations?
- Are PE firms changing their investment strategies due to rising inflation and higher interest rates, and how are they mitigating the effects on their portfolio companies?
- What does all of this mean for debt levels and availability, deal structures and portfolio management?
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