View all insights
dealedge-recession-private-equity-deal-irr

Private Equity Performance During a Recession: Deal Performance in the Global Financial Crisis

As the prospect of a global recession once again looms over financial markets, DealEdge has looked at how private equity deal performance was affected by the last major recession: the Global Financial Crisis (GFC) of 2008-9. 

While the full effects of the GFC were felt for several more years, the US came out of recession in late 2009. As such, DealEdge has contrasted the returns of deals made both in the run-up to the recession, and during the recession itself, to see how private equity deals managed to adapt and recover. 

The US entered recession in Q4 2008, returning to a recovery in Q3 2009

dealedge-recession-us-real-gdp

  • All quarters of 2007 saw positive growth, while 2008 had three out of four quarters that declined. Recovery began in Q3 2009, with further growth recorded through to the end of 2010. 

  • On that basis, DealEdge looked at three key stages of the recession: 

    • The run-up to the recession in 2007

    • The early part of the recession in 2008

    • The late part of the recession in 2009 

  • We looked at buyout and growth deals made at each stage to examine how returns were impacted, and how quickly the industry as a whole was able to adapt to the Global Financial Crisis (GFC). 

Deals made in 2007-8 were affected, but the industry landscape had already restabilized by 2009

dealedge-recession-private-equity-deal-irr

  • Deals made during the run-up to recession in 2006 and 2007 had median returns of 12% and 9% respectively, significantly lower than those made after the recession had finished in 2010-11.  

  • During the recession itself, 2008 was a much more challenging performance year than 2009. 2008 deals posted a median IRR of 9%, on par with 2007, but saw bottom quartile performers sink to less than negative 11%. 

  • 2009, by contrast, posted the strongest median returns of any year either immediately prior to or after the recession. Top quartile returns rose to almost 50%, underlining the strength of the deals made that year. 

Read part 2 on DealEdge.com.

Article
Dataset
Fund of funds
Fund performance
Fundraising
Investing trends
Investment data
Market performance
Market research
Portfolio insights
Portfolio management
Risk management

Read next

image

Family Office LPs: Overcoming Challenges in Private Capital Investment

Family offices face unique challenges in investing in private capital, particularly when balancing financial returns with multi-generational legacy. Active involvement in managing investments can increase the risk of emotional decision-making and asset concentration.

For those investing in private capital markets, a portfolio management solution with proprietary private market data is key to tracking and managing investments effectively. Unlike public markets, private market assets require specialized insights for accurate performance and risk assessment.

Download our whitepaper to discover how advanced portfolio management and data-driven solutions can enhance your investment strategies.

image

Achieving Private Capital Returns to Fund Missions for Endowments and Foundations

Download our whitepaper now to explore effective strategies for balancing financial sustainability and mission-driven goals. Learn how endowments and foundations can leverage advanced tools to navigate market volatility, optimize investments, and maximize impact in 2025 and beyond.

image

Securing Private Market Investments to Meet Liquidity Obligations: A Guide for Insurance Companies

Download our comprehensive guide today to discover strategic approaches for securing private market investments amidst 2025's financial challenges. Equip your insurance company with the tools to navigate regulatory demands, mitigate risks, and maximize returns in a volatile market environment.

Client Exclusives

Private credit: Spotlight on deals — the winners and losers & bounce back from the crisis

Read more
image

Navigating Private Debt: A Deep Dive into Historical Risk and Returns

Read more
image