CoronaVirus: US Economy & Private Equity Firms Still Intact?

CoronaVirus: US Economy & Private Equity Firms Still Intact?

Bankers and the private equity executives in the US are pretending not been affected by Coronavirus at all. However, the statistics show otherwise. US media reports its economy going strong. As per the data obtained on M&A deals in the US, it has fallen by 52% to USD 144.8 billion, with financial transaction volume been hit badly, lowering down to 1323, i.e. 24% less since the emergence of the coronavirus.

The biggest deal of the year for the US was Morgan Stanley buying E-trade for $13 billion. On a global landscape, the decline in private equity investments and the number of M&A activities confirmed the effects of coronavirus on the financial markets.

According to Refinitiv – a financial data provider firm, global transactions fell by 35%, valued at USD 55 billion, a drop of 18% since the emergence of the deadly virus.

Coronavirus Impact on the US Economy, and What Experts Are Saying?

In the words of US bankers – the economy remains shielded from coronavirus after-effects with low-interest rates and abundance of liquidity. Firms in the financial markets are constantly making new deals.

John Ettelson – CEO at William Blair & Company (renowned US investment bank), said – “Nothing impactful enough has been recorded that could change the fate of the US economy in the aftermath of the spread of coronavirus.

Impact of Coronavirus on US Private Equity Firms & Investment Banks Has Become Visible

The aftereffects of coronavirus showed up last week in the US capital markets. Dow Jones Industrial Average went down by 7% or 2000 points. The three major US stock indexes demonstrated a sharp decrease in market ratings.

M&A Deals in the US Financial Markets Immune to the Widespread Volatility

In the words of Ted Swimmer, head of capital markets and corporate finance at Citizens Bank – “I see no long-term damage out of the last selloff. The US economy is currently well off despite the coronavirus repercussions have been observed across the global financial markets.”

CoronaVirus: US Economy & Private Equity Firms Still Intact?
Image Credit – Creator: Kritchanut
Credit: Getty Images/iStockphoto

John Ettelson, President & CEO at William Blair & Company, on mergers and acquisitions, said – “If the virus epidemic makes the company less profitable in the US, it will have a considerable impact on the number of M&A deals happening. Buyers respond quickly to market changes and could lessen the offer prices basis the market situation. On the contrary, sellers are usually slow to react, and therefore, would still demand the original prices. The result will be a disconnect between the two parties involved in the deal-making, lowering down the transaction volume.”

A Career in Private Equity in the US Still Seems Lucrative, Given the Market’s Strong Uphold

Those seeking private equity jobs must not lose hope, provided coronavirus being disrupting the world economy. Aspiring PE professionals can still get their foot in the door amid the widespread outcry pertaining to the deadly virus, as it has not hit the US the economy as severely as the people would have imagined.

Recession Possibilities Still Loom Over US Economy

Ettelson from William Blair & The company further expressed his thoughts on the worries of a recession coming soon in the US markets as a result of the coronavirus epidemic. He said, if it becomes a pandemic, the US might feel the heat going into a phase of recession.

Supply chains from China do support the US economy. For instance, Apple reported not meeting the forecasted revenues for this month as the virus outbreak in China has made the demand for Apple products go down considerably.

Parting Thoughts

The truth of the matter is that US markets have not shown much decline, besides falling down on one or two parameters of market sturdiness. The most recent reports indicate Wall Street surging to new heights while the contagious epidemic is engulfing a majority of the financial markets across the world. S&P 500 seems on track too, in fact, even stronger than usual.

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