Are Private Equity Execs Willing to Travel During COVID-19?

The coronavirus pandemic has been marked by uncertainty across various sectors of the global economy, putting decision makers in a precarious position when it comes to conducting business.

In the world of private equity, travel and site visits are often hallmarks of due diligence in cementing deals.

But more than six months into the COVID-19 crisis, are private equity executives willing to take the risks associated with travel?

Findings from a new survey conducted by research platform proSapient appear to indicate that many in the industry are prepared to travel in order to ensure that they have a competitive advantage.

The survey asked 100 private equity executives at general partners around the world about their attitudes on travel during the pandemic. Their titles ranged from analyst to CEO. Just over half were senior partner-level or above.

More than half of them — 53% — said they consider travel to be "very important" to securing a competitive advantage. Another 35% consider it "somewhat important."

About 80% said they would be willing to travel to due diligence an asset, while 70% said they are willing to quarantine to do so. Only 41% said they would quarantine for longer than a week, however.

The results of the survey included 59% of responses based in Europe and 27% based in the United States, where private equity dealmaking was hammered during the second quarter. Dealmaking was down about 20% in the first half of 2020 compared to the first half of 2019.

One of the greatest challenges encountered in the U.S. has been the impracticalities of remote due diligence, Private Equity International reported recently.

Simply put, general partners prefer to meet management teams, walk plants and see assets to perform "deep diligence."

Our firm holds the same priorities when it comes to identifying the right people. We also understand that we are all living in extraordinary circumstances, each of us individually with our own set of risk factors that weigh into the decisions we make.

We take this survey as a sign of encouragement that there is confidence in the safety of purposeful travel and willingness to do so under business conditions that warrant it.

As vaccines become available and the risks of the pandemic are better contained, we expect that we'll see a return of dealmaking and finalization of deals that have moved slowly over the course of 2020.

For now, the solace is that many executives are prepared to accept the risks of travel when it comes to important business, and that they are willing to do so as safely as they can manage.

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