ECA Partners Announces CFO Survey on the Impact of the COVID-19 Downturn on Private Equity-Owned Companies

ECA Partners announces results of a recurring survey of CFOs at Private Equity-backed companies on how the COVID-19 downturn is impacting their financial priorities. The first iteration of the survey demonstrated the severity of the impact on company finances; the second iteration shows a clear shift from cost management and toward acquisitions, new product launches and hiring.  

Selected findings include:

  • Compared to 2020, 45% of CFOs plan to increase spending over the next 90 days, while 46% plan to keep spending the same, and only 9% plan to reduce spending
  • Compared to the past 90 days, over the next 90 days most CFOs expect spending on capital expenditure, hiring, salaries and wages, and discretionary spending to increase or stay the same, with 62% reporting an expected increase in hiring spending

Half of CFOs surveyed in May 2020 reported reducing salaries, 87% have returned salaries to pre-COVID levels. "At a time when many Americans are still waiting for their salaries to be restored, the PE sector is clearly ahead of the curve," said Atta Tarki, CEO and Founder of ECA Partners. "This supports previous findings that PE-backed companies are better positioned to avoid distress and weather crises than many of their peers." 

The survey demonstrates that the PE sector has not only stabilized but is recovering. One year ago, 78% of CFOs had cut spend by more than 10%. Now, more than 90% of CFOs plan to increase or keep spending constant. Only 9% of companies plan to reduce spending. CFOs also signaled they plan to spend more or much more time increasing cash flow (51%) and developing new products and markets (57%).

Most CFOs expect discretionary spending, capital expenditure, and spending on hiring, salaries, and wage, to increase or stay constant over the next 90 days. A minority expect spending in these areas to decrease. For wages and salaries, 42% expect to spend more, only 3% expect to spend less. Looking to spending on new hires: 62% expect to spend more on hiring over the next 90 days, and only 9% expect to spend less.

"PE-backed companies are investing in people again," Tarki added. "They are looking to add the talent they need to grow, and making the right moves to retain the talent they have."

The survey offers a snapshot of PE-backed companies in the US. Respondents hail from both business-to-business and business-to-consumer industries and from small ($0-25m in recurring revenues; under 50 employees) to large (more than $1b in recurring revenues; more than 1000 employees).

About ECA Partners

ECA Partners is a leading search firm specializing in placing top candidates in permanent, project and interim roles with PE funds and their portfolio companies. Founded in 2011, ECA is a leading proponent of evidence-based methods in the recruitment and evaluation of talent. Founder Atta Tarki is the author of Evidence-Based Recruiting (McGraw Hill, February 2020).

Source: ECA Partners


Categories: Business News

Tags: Coronavirus, Covid-19, Economy, Finance, PE Portfolio, Private Equity

About ECA Partners

View Website

ECA Partners is a leading search firm specializing in placing top candidates in permanent, project and interim roles with PE funds and their portfolio companies.