Bill Gates and Warren Buffett’s annual letters Private equity trends from 2019 Coronavirus on Supply Chain. Global supply chain is coming to a halt. The coronavirus has spread rapidly across Asia and Europe. U.S. market indices have dropped +10% and show no sign of stopping in the near term.
This week, Microsoft and Apple have announced they both expect not to meet quarterly guidance because of the disruptions. I haven't seen smaller companies provide the same warnings but you know a majority of global businesses will be impacted. Major conferences like Mobile World Congress have been canceled to stop the spread of the disease. This a major business disruption.
I don’t think people are prepared if the virus spreads to the U.S. If it is a contagion, many households don’t have enough supply to stay indoors for 1-3 months until a vaccine is found. The Rise of Remote Work. On a brighter note, teleconferencing is picking up globally. Businesses won't close down simply because of fear. Companies are being forced to find alternate solutions to keep the lights on. Zoom, a popular videoconferencing tool, has onboarded more users in Jan-Feb 2020 than all of 2019. Other remote tools are also seeing increased usage, which will mean higher profits in the short term.
Annual letters Read Bill Gates and Warren Buffett’s annual letters Buffett’s is a personal favorite of mine He has decades worth of writing, documenting his investment process This year he focuses on succession planning and the broken incentives of for board of directors. Bain private equity 2020 report The private equity market in 2019: Strong deal activity despite worsening macro conditions More private equity general partners are already preparing for a downturn Buyout deals posted another strong year, despite a worsening macroeconomic outlook A growing share of buyout deals have been highly leveraged with debt.
More than 55% of US buyout deals had a multiple above 11x The average time to use buyout dry powder has fallen to levels well below the stockpile just before the financial crisis In deal returns, individual lead managers—especially women—matter more than the PE firm Technology deals, especially software buyouts, have produced stronger returns than the private equity market overall.
No transcript for this episode.