Survey reveals expectation that some industries will see growth in the year ahead
Most alternative investments professionals believe that deal activity will bounce back to pre-pandemic levels over the next year.
According to a survey of industry professionals by US accounting firm EisnerAmper, 74% expect recovery by the close of the fourth quarter of 2021 with more than four in ten saying it will happen by the end of the second quarter.
For the fourth quarter of 2020, technology, and health care/life sciences as are seen as the sectors with the greatest opportunities.
Although many deals ground to a halt in March, those that were done involved a change in how the work was conducted, with many involved working from home.
However, 80% of private equity respondents said that they have been able to satisfactorily conduct deal due diligence during the pandemic. There is high expectation that some of the changes in practice will be permanent post-pandemic, such as fewer site visits and in-person meetings.
“The alternative investment industry has remained resilient during a year that no one could have predicted and has adapted quickly and efficiently to the challenges that the global pandemic has posed,” said Peter Cogan, Managing Partner of EisnerAmper’s Financial Services Industry. “The survey findings unveil a fairly optimistic outlook, even as uncertainty lingers amid the upcoming presidential election and rising COVID-19 cases in some areas.”
Top challenges
Although finding good deals is seen as a challenge in the coming months, hiring intentions remain strong.
“Plans to resume hiring in 2021 is a strong indication that the private equity industry is recovering from the disruption that the pandemic caused in the first half of the year,” said Cogan. “Furthermore, as private equity firms face the challenge of finding diversified deals, recruiting fresh talent is vital to help realize new opportunities.”
When asked to name the top challenge for their business, hedge fund executives noted cybersecurity concerns (31%) followed by incorporating new technology (25%).
Hedge funds were found to be slow to adopt tech such as AI but are keen to find new ways to add value for clients.
“The virtual environment has caused a dramatic shift in hedge funds’ top concerns and challenges from fluctuations in international trade policy last year to cybersecurity concerns this year,” said Cogan. “However, we’re also seeing the industry consider new opportunities stemming from the pandemic as executives think about launching new products and funds that may stand to benefit from market dislocation.”
