Private equity to rethink due diligence after pandemic, How PE’s focus on operations fared in downturn, Investcorp Technology Partners agrees to acquire Avira

How private equity will adjust to a post-COVID-19 world and Investcorp Technology Partners is buying Avira.

Hello!

Hope you had a tolerable holiday (of whatever flavor) weekend. I made a traditional Ukrainian Easter dish to try and make things a bit more festive.

Interesting piece published last week from Bain & Co on how the private equity industry could adjust to our post-covid-19 reality. The paper said that sector expertise will become even more important than before the outbreak.

Sector expertise has had a certain attraction for limited partners, who are looking for managers that specialize in particular sectors or strategies. Tech-focused funds have been particularly popular in recent years, as well as those dedicated to healthcare investments.

“Funds will need sector expertise to place smart bets on how the future will play out,” according to the article, written by Bain & Co partners Hugh MacArthur and Graham Elton and Practice Senior Director Brenda Rainey.

Due diligence will change: The outbreak highlighted the importance of modeling a range of scenarios and preparing for the worst, so assessing the impacts of unpredictable disruption will become standard, the article said.

“A good example highlighted by the current crisis is the importance of gauging a target’s resilience to supply-chain weakening,” according to the article. “Being able to model a temporary or longer-term unraveling of global markets will be a critical part of determining a company’s ability to win.”

Perhaps the most important change: after the global financial crisis, many firms went all-in on portfolio value creation, building out big operations teams. This new crisis will expose what worked and potentially lead GPs to tweak those structures to make them more effective, the article said.

“After a period of extraordinary performance, the PE industry is already bracing for a difficult time. But private equity’s advantage is that it can actively manage portfolio companies to diagnose and mitigate problems in real time,” the article said.

Read the full piece here.

Top Scoops
Riverwood Capital is getting closer to a combined $1.5 billion for its third flagship pool and a Latin America-focused sidecar vehicle, writes Kirk Falconer on Buyouts. The two funds together have secured about $1.16 billion, Kirk writes. Check it out here.

Investcorp Technology Partners agreed to acquire Avira, which provides cybersecurity software services. Investcorp Technology is paying $180 million for the company, which is headquartered in Germany. Read it here on PE Hub.

Have a great Monday! Hit me up as always with tips n’ gossip, feedback or just to chat at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.