Average decline in share price of European listed private equity (LPE) firms in Q1
of private equity firms saw a drop in value in Q1
of the private equity firms we surveyed expect Q2 results to remain flat or decline by less than 10%
of respondents have made no change to their valuation approach in Q1, Q2, or both despite continuing volatility and uncertainty
With the majority of respondents having taken a value hit in Q1 valuations, a PwC survey of private equity (PE) firms reveals that more than 80% anticipate either a flattening or much more modest falls in their Q2 results.
Is this more optimistic Q2 outlook justified? Both PE firms’ decision to bear the bulk of the valuation pain early and the recent rally in public markets would point to a softer landing in Q2. However, we expect significant volatility and uncertainty to continue through into the latter half of the year, if not beyond, and building a robust valuation process to assess and reflect this uncertainty is therefore key.
Our survey asked whether (and how) respondents are reacting to this economic uncertainty and market volatility by adapting their approaches to valuation. Without at least some adjustment and augmentation of valuation techniques, the big question for you as a PE firm is whether your results will stand up to intensifying investor, regulator and auditor scrutiny?