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The private equity chairman

My World 2021

My World: June 2021…

This is part of a series of articles where our contributors describe how they think things will look a year from now.

When weighing up potential new investments, pandemic resilience will be a key valuation factor

During probably too many years in the investment sector, I have witnessed several returns to business as usual when permanent disruption had been anticipated. The 1987 stock market crash, the dot-com fallout in the early 2000s, and the 2008-09 global financial crisis – did any of them fundamentally change my working life? Not that I can remember. Mesmerising though each apparently seismic moment was, the familiar routines of working life returned more quickly than anyone expected.

Is the covid-19 pandemic any different? Is there now a ‘new normal’? Or will this solitary, virtual, laptop-based existence be a faded memory by June 2021? Will Zoomposiums, quarantinis and blue Skype thinking – indeed, all ‘lockdown lingo’ – be long forgotten? Or (unlike after 1987, 2000 or 2008-09) will working life never be quite the same? And how might covid-19 have affected our approach to investing?

Well, who knows? However, my June 2021 crystal ball does reveal two things: firstly, that I will continue conducting one-to-one and one-to-two meetings via Zoom or its like. The video conferencing technology on offer during lockdown has been a revelation and there is no turning back. Yes, I will travel to my office, but most external meetings will be held internally, as it were. No more crowded Tubes or pricey black cabs from SW1 to EC4 for meetings with lawyers and accountants. Nor, dare I say, will anyone want to come and see me. The only thing you cannot do online is shake hands – and an on-screen wave is just as good. On a similar theme, I suggest that any employer who does not offer its staff home working for at least one day per week as standard will fast become uncompetitive.

My second prediction is that potential new investments in June 2021 will be seen through a ‘pandemic lens’ and valued accordingly. Resilience has been redefined during covid-19: some businesses – including one or two of our own – went overnight from lots of revenue to not very much, while most of our investees barely missed a beat despite the unfolding awfulness of the virus. How businesses performed during lockdown – together with their ‘bounce back’ trading figures in late 2020 – will affect M&A valuations in 2021. Investors will not assume covid-19 is a one-off. How great will be the premium paid for resilience I cannot say, but there will surely be one.

So, what are my strongest lockdown memories – both good and bad – that I will carry forward into 2021? There are so many: seeing for the first time all my colleagues’ smiling faces on one laptop screen each dialled in from his or her own home. NHS and care home heroes. The seemingly inexorable rise in covid-19 victim numbers. Donald Trump attempting to explaining the potential health merits of injecting disinfectant. Captain Tom’s £30m. Two of my children engaging in what is laughably labelled virtual schooling. Me raging against patchy wifi. House Party calls. And many more…

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