Private Equity – The changes that are here to stay after COVID-19

The 11th of June marks the third month since the World Health Organisation (WHO) declared COVID-19 a pandemic. Many of the Asian countries that were first to experience the pandemic have now lifted the restrictions they had imposed to control the outbreak, and Italy – one of the countries hardest hit by COVID-19 – lifted its lockdown measures on the 3rd of June. The world is gradually returning to some degree of normalcy, albeit with many changes from the pre-COVID-19 era – some will be short-lived, some are here to stay, and some will take years to emerge. As we continue to receive updates from the managers of private equity funds and companies that we invest in across the world, this week we reflect on the predictions some have made about the parts of our work and life where they believe the changes are here to stay:

• Shared office locations such as WeWork – a quote from one of our managers “I cannot think of a worse example of a business, spending days working alongside people you don’t know”.
• In person meetings – after an initial period of adaptation and ‘holding’, some new private equity investments have been made completely ‘virtually’ and we have even heard of hiring taking place.
• Physical retail – the past 20 years have seen a war between ‘bits’ (e-commerce) and ‘mortar’ (physical retail) which has been firmly won by ‘bits’.
• Mall-based retail – even more than physical retail generally, this market was already dying but COVID-19 was the death-knell.
• Higher education – universities will have to fundamentally shift their model due to their high cost. Alternative ways of delivering education will explode – more online tuition, more shopping around for individual lecturers outside of the particular university.
• Commuting into City Centres – the optionality to work from home is here for good.
• Formal communication – this period has seen an increased use of traditionally informal communication channels – business relationships forming and transactions developing over video calls.
• Dress codes – technology companies were early adopters of less formal dress codes and working from home during the lockdown period has accelerated the broader spread of this trend. Many clothing retailers now have “working from home” sections on their sites.
• The use of cash – a move away from cash and towards contactless electronic payment has been accelerated by COVID-19.
• Handshakes – will this ancient custom survive?  The custom of shaking hands originated in ancient Greece as a symbol of peace for people to show each other they were not carrying a weapon. Later it became customary to shake hands to shake out any hidden weapons.

Source: Sandaire

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