The Performance of Private Equity Portfolio Companies During the COVID-19 Pandemic

We study the performance of UK PE-backed companies during the COVID-19 pandemic.Compared to matched, non-PE-backed industry peers, we find evidence supportingthe outperformance of PE-backed companies during the pandemic period. Our results indicate that using both operational and financial engineering mechanisms in response to the shock, PE-backed firms were able to outperform peers across many performance dimensions. When we study company insolvency filings over the sample period, we find that PE-backed firms exhibit a higher probability of insolvency during the pandemic relative to control firms. However, non-PE-backed firms in distress had a higher incidence of liquidation, while PE-owned firms more often negotiated formally with creditors to continue trading.