DealCloud Survey Shows Optimism as Private Investors Look Beyond the Pandemic

Fundraising Expectations High as Firms Gear Up to Deploy Dry Powder

DealCloud (an Intapp company), a leading provider of deal, relationship and firm management solutions for capital markets firms, released the Fall 2020 edition of its Dealmaker Pulse Survey, which indicates that private investors have moved past pandemic concerns regarding impact on current investments and are now concentrating on sourcing and closing new deals. In addition, a surprising number of firms raising new funds expect to meet or exceed their targets, despite existing dry powder.

“In the six months since our last survey, the focus has shifted from portfolio concerns to dealmaking,” said Ben Harrison, co-founder and president of DealCloud. “Investors expect founder-owned businesses to see significant deal activity, though private equity firms of all sizes recognize that finding quality assets at fair valuations will be a challenge with increased competition.”

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The survey also revealed that fundraising may be returning to pre-pandemic levels. Only 12% of investors postponed or suspended fundraising plans, and a mere 6% lowered the target for their next fund. Meanwhile, an impressive 26% said their next fund will actually be larger than originally anticipated.

Other findings from the survey include:

• New platforms are the focus: 70% of investors said new platform investments are their primary focus over the next six months, compared to 35% six months ago
• Fewer investors expect valuations to decline further: only 35% of respondents said they expect valuations to decline, down from 93% in April
• The pandemic continues to impact the work environment: 47% of private equity firms have plans to return to the office, and only 40% have plans to resume business development travel, as technology-driven operations are seen by many as a bare minimum to remain competitive and cultivate key relationships
• For some, dealmaking evaporated: 30% of investors said their firm did not close a deal (platform or add-on) since March

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“Clearly, investors are eager to deploy dry powder, but questions remain about who is able to close deals in this environment,” said Chris Gaffney, co-founder and managing partner of Great Hill Partners, a leading growth-oriented private equity firm. “Many firms are finding ways to close deals even as business development teams remain grounded, suggesting that the relationship cultivation that has traditionally taken place face-to-face has become increasingly reliant on technology over the past six months.”

DealCloud’s Dealmaker Pulse Fall 2020 Survey polled dealmakers to gain key insights into how capital markets firms are dealing with the effects of the global pandemic and thinking about opportunities for the fourth quarter, next year and beyond. The online survey was conducted via DealCloud Dispatch, the platform’s integrated m*****************, amid the COVID-19 crisis from Sept. 21 to Oct. 5, 2020.

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