04 May, 2020

While there is still significant uncertainty as to the full impact of the COVID-19 virus, past market corrections can provide insight as to how the secondary market may react in the current environment. Historically, market downturns have affected the secondary markets in the near term by lowering transaction volumes, slowing the pace of realizations and distributions (this is true for private equity more broadly as well), and putting downward pressure on pricing. As demonstrated during the Global Financial Crisis (GFC), once volatility subsides and stability is restored, secondary markets have generally rebounded from market downturns with strong volume and have offered attractive opportunities for investors with available investment capital.

 

In this paper we discuss the following key points:

 

  • In the near term, Mercer expects a meaningful slowdown of transaction volume in the secondary market.
  • In the medium to longer term, we would expect a bounce back in volume.
  • As the markets begin to stabilize and the volume of opportunities increases, the secondary market could provide an area for buyers to generate attractive risk adjusted returns.
  • The COVID-19 secondary market could be different from the GFC.
  • There are several factors that could impact the performance of secondary transaction and funds that are already invested.

Download the paper to learn more.



 

Please see Important Notices for further information.

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