Lessons Learned: Insights from the COVID-19 Crisis for Middle Market Private Equity Sponsors

Executive Summary

The COVID-19 crisis forced middle market private equity sponsors to make rapid changes to core business and investment processes to keep their businesses running and their portfolios intact. Because many of these changes proved successful under the most trying circumstances, some will remain in place long after the pandemic recedes, permanently altering the industry.

To better understand how the crisis affected the middle market private equity industry, and how sponsors responded to COVID-19-related challenges, New York Life Investments Alternatives (NYLIA) partnered with Coalition Greenwich to conduct more than 100 in-depth interviews with senior professionals at U.S. middle market private equity sponsors. This report presents the complete results of that research, including an assessment of the most important changes triggered by the crisis across core functions such as investing, deal sourcing, transaction financing, exit strategies, and fundraising. It also provides a deep analysis of which changes will persist into the post-pandemic era, as well as key learnings, including:

• A sharpening of the investment process
• New ways of using technology
  
• The importance of relationships
  
• Opportunities in ESG and DEI