Private Equity Confidence Survey Central Europe

Analysis

Private Equity Confidence Survey Central Europe

Confidence down, experience up

The Private Equity Confidence Survey has been tracking the changing sentiments of the Central European investment community every six months since 2003. Deloitte Central Europe proudly presents the latest report which marks the 35th edition of the programme.

Central Europe’s private equity markets are feeling the impact of Covid-19 – but there is more optimism than during the 2008 Global Financial Crisis, suggesting the experience the region’s deal-doers have accumulated may buoy investments and create a strong basis for new deals, according to the latest Deloitte Central Europe Private Equity Confidence Survey.

Confidence down, experience up

Central European Private Equity Index: Key findings

It is a buyers’ market, with the pricing bubble deflating as the pandemic takes its toll. Nearly half (45%) of respondents believe vendors have decreased their price expectations over the last six months, and over half (51%) believe they will continue to do so.  The figures mark an acceleration of trends already hinted at in our last Survey, despite a lack of pandemic to catalyse change then.

Most people expect to focus on deal doing in the coming months. Three-quarters (74%) expect 2020 to be a good vintage, likely owing to the declining vendor price expectations. While this isn’t ideal for sellers, it bodes well for GPs with capital to deploy (which is most of the PE firm that operate in CE). 

Confidence is down, but economic expectations are sprinkled with optimism. While there is a sizeable increase in respondents expecting conditions to worsen (from 46% to 68%), and an even starker drop in the percentage expecting conditions to remain the same (from 54% in the last Survey to just 19% now), it is interesting to note that 13% actually expect conditions to improve. And the drop in economic expectations was starker in our last Survey, when no respondents expected an improvement. 

Private Equity Confidence Survey

Download the report to find out more (PDF)

Given the ongoing uncertainty which lingers over markets, as well as the omnipresent element of the Covid-19 crisis, we can only hypothesize that these current expectations are buoyed by one variable which was less present in 2008: experience.

- says Mark Jung, Deloitte Partner and Central Europe Private Equity Leader. 

The 2008 Global Financial Crisis was most CE deal-doers first crisis. These investment professionals have built up significant experience since then, and this will make them much better placed to navigate the coming months. Simply put, the battle-hardened may be better able to keep a steady hand, identify opportunities – and capitalise on them. With many GPs in CE well capitalised, their financial support combined with human capital by way of expertise in supporting growth across cycles can be a powerful force in helping many companies in the region to recapitalise and emerge even stronger from this time.

- adds Mark Jung.