Q3 2020 Private Markets Outlook

US Macroeconomy

After the steepest economic decline in history during Q2, the US GDP skyrocketed by +33.1% during Q3-2020 which is in stark contrast to the -31.4% contraction in the previous quarter. Much of the country was shut down in the second quarter due to COVID-19 and that forced the economy to decline; most businesses reopened in Q3 with economic activity underpinned by increased consumer spending (+41%), gains in business (+83%) and residential (+59%) investment, and improved exports. Although headline GDP growth was very strong, the US economy is not on strong footing with unemployment still at 7.9% which is more than double the pre-pandemic unemployment rate. Some half of the 22 million jobs lost during March and April remain unfilled; 12.6 million people are still without work.

Over the past four years, private market investors have confronted three significant macro shock events — the COVID-19 pandemic, the war in Ukraine and 40-year inflation highs. As the market faces intersecting headwinds of geopolitical instability, inflation and volatility, CEPRES evaluated how asset owners are managing their holdings.

Private Equity Exits Tumble to Decade-Long Low as Managers Hold Back

Private equity fund managers have sharply pulled back on sales of their portfolio companies this year, with exits from their strategies perhaps the most visible evidence of a weakening market that has seen declining valuations, slower fundraising and other flagging indicators.

Venture Managers Hit Fundraising Record, But Warning Signs Flash

New forecasting based on recent economic shocks predicts venture distributions to slow by 2024, deferring into later years, with the peak drop of 79% coming next year.

Despite Macro Headwinds, CEPRES Expects Private Equity Valuations to Hold Up in 2023

Private Equity Exits Tumble to Decade-Long Low as Managers Hold Back

Venture Managers Hit Fundraising Record, But Warning Signs Flash

New forecasting based on recent economic shocks predicts venture distributions to slow by 2024, deferring into later years, with the peak drop of 79% coming next year.

Q3 2020 Private Markets Outlook

US Macroeconomy

Read next

Despite Macro Headwinds, CEPRES Expects Private Equity Valuations to Hold Up in 2023

Private Equity Exits Tumble to Decade-Long Low as Managers Hold Back

Venture Managers Hit Fundraising Record, But Warning Signs Flash

Despite Macro Headwinds, CEPRES Expects Private Equity Valuations to Hold Up in 2023

Private Equity Exits Tumble to Decade-Long Low as Managers Hold Back

Venture Managers Hit Fundraising Record, But Warning Signs Flash

Client Exclusives

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

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