U.S. Economic Outlook, Family Offices and PE-Backed Companies: Day One of the ACG Fall Summit

While Faucher expects another round of stimulus from Congress, he doesn’t predict any large tax increase on businesses or high earners from the coming Biden administration. “In fact, we might see tax cuts if that’s what’s needed for Biden to get the GOP on board for stimulus,” he said.

Despite reports on Monday that pharmaceutical giant Pfizer has developed a vaccine for the coronavirus, along with a subsequent jump in the stock market, the U.S. economy still has many vulnerabilities. One slide of Faucher’s presentation showed that a sizable portion of businesses don’t believe they can continue in the next six months if current economic conditions continue.

Family offices want their investments to mirror their existing expertise, Browne said. In another macro trend, family offices are moving toward specialization, including in areas like health care and manufacturing, she added.

This trend may lead specialized family offices with the same focus to work together, but Nick Cimino, head of private investments and alternative credit at PNC Asset Management Group, said that isn’t occurring frequently.

Sasha Bernier, senior vice president and investment committee member at family office Cheltenham Investments, said before his firm enters into co-investments, he looks at the track record of partners. He adds that this is not complicated because of the lack of players in the field.

PE-Backed Execs Share COVID Survival Secrets

In the early spring of 2020 when the national lockdown began in the U.S., PE-backed companies worked closely with their investors as they moved into high gear to get through the crisis.

For Simplura Health Group, a senior care facilities management firm, liquidity was a concern at the start of the pandemic. “We drew down new lines of credit because there was fear that the credit markets would seize up. Our backers were a help here because they had good relations with our lenders. They were another voice in those conversations,” said Jim Caruso, chief financial officer for Simplura during the ACG Fall Summit panel titled “Leading a PE-Backed Company into a Post-Pandemic World.”

Lockdown came at an inopportune time for Simplura, which was working on a transaction. He said the company had to pause the deal and concentrate on operational risk when the government declared a national emergency.

Communication with other businesses within its investor’s portfolio was key for Office Practicum, a software-as-a-service company that serves pediatric offices, as it navigated the pandemic this year.

“We asked what other portfolio companies were doing and we held monthly meetings with other CFOs to share best practices. We hadn’t done that before COVID but it gained momentum and we benefited from it,” said Ellen Purdy, CFO for Office Practicum.

Purdy’s company also benefited from its private equity owner’s guidance and relationships. Office Practicum’s backers helped it navigate the process of borrowing through the Paycheck Protection Program, after the company qualified for a loan. “Our backers helped us make the case, so we borrowed and three weeks later we paid it back, every penny of it,” she said.

Portadam, a flooding solution provider, also qualified for a PPP loan. “One of the key roles of our backers was providing information, especially in the early phase. Our backers were very helpful with aggregating information and filtering it out and distributing it out, and helping us see through the way to pay that loan,” said Jyothish Daniel, CEO of Portadam.