The coronavirus pandemic has disrupted the way private equity works in a profound way, forcing firms and investors alike to operate remotely in an industry defined by personal connections.
This disruption’s impact on fundraising has been widely discussed, especially for emerging managers, as Buyouts has reported. David Enriquez, head of private equity for New York City’s pension systems, said the work-from-home environment increased LP productivity but hampered the building of new relationships.
Another important industry custom is the annual general meeting, where firms network with limited partners and investors to build relationships and explain how their capital is being invested.
“It’s not ideal, but now that I’m doing it, it’s sort of making me think twice about all the travel we do every year,” one LP told Buyouts last year. “Videos aren’t great, but they’re so efficient.”
Now, a new survey suggests that virtual meetings could become a permanent part of the industry.
According to findings by Prosek Partners, a public relations firm, 86 percent of general partners polled will consider having so-called “hybrid” annual general meetings, which will incorporate pre-recorded or virtual content.
The survey includes 58 general partners with less than $1 billion to more than $100 billion in assets under management, Prosek said.
In 2021, 46 percent of the firms will host hybrid meetings, up from 28 percent last year, compared to only 18 percent that plan to have in-person only meetings.
A popular option in 2020 was for firms to have their meetings live online, with 41 percent of them doing that. Only 14 percent plan to do that this year. Additionally, 31 percent pre-recorded their 2020 meetings and offered them online on demand. Only 23 percent plan to do that this year.
Other findings in the Prosek survey include a clear ramp-up in resources dedicated to production. Of the firms, 41 percent had increased their budgets while 50 percent planned to keep it about the same.
Still, managers do seem eager to get back to the in-person meeting model as soon as possible. The Prosek survey found that 30 percent of firms plan to host small, in-person networking events in 2021, while 56 percent do not plan to convene LPs virtually or in person.
Action Item: read the full Prosek Partners survey results here.
Correction: Due to an error in data provided to Buyouts, a prior version of this report included an incorrect range of AUM for the survey respondents, $2 billion to $50 billion. The correct range is less than $1 billion to more than $100 billion. The report has been updated.