June 22, 2020

Countries across the developed and emerging world are trying to manage the severe economic short-term impacts of the COVID-19 crisis. Given the immense uncertainty, it will take much longer to even begin to assess the permanent implications for the world’s populations, companies, and economies. The ultimate effects will, in large part, be dependent on the duration of the crisis, the length and depth of which is currently generating speculations and requires substantial analysis.


Due to the inherent lag in private market reporting, even the initial impact on private markets will take considerable time to fully evaluate. However, the behavior of private markets during the Global Financial Crisis (GFC) may provide some insight into the potential short-term and long-term expectations of private markets in the current crisis. The historical results presented in the paper show that while some funds were negatively impacted by the GFC, others may have benefited based on their respective vintage. Below we examine how private market fund managers reacted to a similarly unexpected and profound crisis which began in 2008.

Some of the takeaways from the GFC were that it led to:

  • A decline in exit
  • A decline in deal flo    
  • Lower internal rates of return.
  • Attractive returns for post-GFC vintages.
  • Ripple effects across vintages for years after the crisis.

Across various fronts, 2008 was a momentous year for the global economy and financial markets. Many attribute the start of the GFC to the abrupt bankruptcy of Lehman Brothers on September 15, 2008, which was the largest corporate failure up to that time. However, initial warning signs were already noted with Bear Stearns being bailed out and sold earlier in the year. The exact initiation date of the COVID-19 crisis is still open to debate, but it is thought to have occurred over a relatively limited timeframe around the beginning of 2020 and there was no parallel precursor.


This paper analyses Mercer's experience from the GFC, observations to-date on COVID’s impact and it also suggests key considerations for private equity investors.

William T. Charlton, Jr., Ph.D., CFA
William T. Charlton, Jr., Ph.D., CFA

Global Head of Private Markets Data Analytics and Research

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