How COVID-19 is transforming the PE operating model

In this episode of the NextWave Private Equity Podcast, Tim Dutterer, EY-Parthenon Head of Private Equity, and Greg Schooley, EY US Value Creation Leader, join Winna Brown to discuss how COVID-19 is transforming operating models across the PE portfolio and beyond.

After the economy recovered from the Great Financial Crisis of 2008, economic activity and growth were steady and predictable. As a result, private equity-owned companies optimized their operating models for efficiency, anticipating the next economic cycle would a more modest recession. No one, publicly traded corporates or PE-owned companies, was prepared for the sudden and complete secession of economic activity caused by COVID-19.

However, PE investors reacted very quickly, understanding the severity of the crisis and mobilizing to increase liquidity across the portfolio. While a few sectors were spared from the sudden economic collapse, a wide spectrum of both impacts and actions can be observed across the vast majority of the US economy.

We believe that the COVID-19 induced economic collapse will greatly accelerate several ongoing trends:

  • Global supply chains will fragment as companies look for more resiliency
  • Continued reconsideration of extent of reliance on China compared to lower-cost and lower-profile countries 
  • Automation will be more widely deployed in a range of activities and sub-functions
  • Back-office functions will be increasingly outsourced 
  • The value of office real estate will diminish due to large-scale adoption of remote ways of working 
  • Assessing the impact “black swan” events will become the norm in scenario planning

The post-great recession period of stable, predictable growth enabled companies to optimize and achieve greater efficiencies. The big question for the next decade will be: how much efficiency must be sacrificed to achieve greater resiliency that the post-COVID-19 world requires? And how will this resiliency affect the returns PE firms can generate?

For your convenience, full text transcript of this podcast is also available. Read the transcript

Presenters

Tim Dutterer
EY-Parthenon Head of Private Equity
Gregory Schooley
EY US Value Creation Leader
Winna Brown
EY Americas Financial Accounting Advisory Services Private Equity Leader

Podcast

Episode 11

Duration 29m 00s

In this series

series overview
(Event List - Manual)

How COVID-19 is transforming the PE operating model

In this episode, our speakers describe how COVID-19 is transforming operating models across the PE portfolio and beyond.
Podcast

Episode 11

Duration
29m 00s

Presenters

Tim Dutterer

EY-Parthenon Head of Private Equity

Gregory W. Schooley

EY US Value Creation Leader

Why a post-pandemic supply chain will prioritize resilience over efficiency

In this episode, our speakers explain why a post-pandemic supply chain will prioritize resilience over efficiency.
Podcast

Episode 10

Duration
27m 00s

Presenters

Winna Brown

EY Americas Financial Accounting Advisory Services Private Equity Leader

Jeff Schlosser

EY US Supply Chain Transactions Leader

Why “cash culture” is a critical lever in today’s PE climate

In this episode, our speakers explore why freeing cash from working capital can allow PE to prolong sustainability, realize value sooner and invest earlier.
Podcast

Episode 09

Duration
27m 00s

Presenters

Sven R. Braun

EY Americas Operational Transaction Services Principal

Nick Boaro

Ernst & Young LLP Strategy and Transactions Partner

How PE can manage COVID-19 tax implications in the US and Europe

In this episode, our speakers help PE funds and portfolio companies understand and manage the tax implications of recent coronavirus stimulus packages.
Podcast

Episode 08

Duration
25m 07s

Presenters

Winna Brown

EY Americas Financial Accounting Advisory Services Private Equity Leader

How to navigate a remote close during COVID-19

In this episode, our speakers discuss how to manage a remote close in today’s extremely volatile financial and regulatory environment.
Podcast

Episode 07

Duration
29m 00s

Presenters

Winna Brown

EY Americas Financial Accounting Advisory Services Private Equity Leader

Why the CFO is becoming private equity’s quarterback

In this episode, our speakers explore the evolving role of the private equity CFO.
Podcast

Episode 06

Duration
17m 15s

Presenters

Winna Brown

EY Americas Financial Accounting Advisory Services Private Equity Leader

Mike Lo Parrino

EY Americas Financial Services Organization Private Equity Leader

What 2020 and beyond looks like for global private equity

In this episode, our speakers explore the outlook of private equity and its key focus areas in 2020 and beyond.
Podcast

Episode 05

Duration
18m 26s

Presenters

Winna Brown

EY Americas Financial Accounting Advisory Services Private Equity Leader

Andres Saenz

EY Global Private Equity Leader

Why private equity can endure the next economic downturn

In this episode of the NextWave Private Equity podcast, our speakers review the industry’s evolution since the 2008 recession and its position for growth.
Podcast

Episode 04

Duration
26m 16s

Presenters

Andrew Wollaston

EY Global Reshaping Results, Turnaround and Restructuring Strategy and Transactions Private Equity Leader

Pete Witte

EY Global Private Equity Lead Analyst