A new Stifel Financial Corp. survey of nearly 300 technology executives, entrepreneurs, and private equity (PE) and venture capital (VC) investors finds most expect the COVID-19 crisis to have a lengthy impact on business operations, leading to a U-shaped economic recession. At the same time, the survey indicates that a majority of companies appear to have sufficient liquidity to weather the storm and potentially eye add-on acquisitions.
Read More: Jack Henry & Associates Launches Core-Integrated Accounts Receivable Financing
Key survey highlights include:
- The majority of PE/VC respondents (62%) expect to see a business impact from COVID-19 on their portfolio companies for more than six months, while nearly half of tech executives/entrepreneurs (46%) are also planning for disruption lasting at least half a year.
- Most (55% of executives/entrepreneurs and 65% of PE/VC investors) expect a U-shaped recession.
- A majority of PE/VC investors (76%) and executives/entrepreneurs (55%) are planning to pursue add-on acquisitions or will push their portfolio companies to do so as the tech sector faces COVID-19 business disruptions.
- Executives/entrepreneurs are slightly more optimistic about 2020 revenue projections with one-third (34%) expecting to meet their budget goals, but just 19% of PE/VC investors believe their portfolio companies can reach that achievement.
- Customer churn doesn’t seem to be a problem yet, with roughly 77% of executives/entrepreneurs and 76% of PE/VC investors reporting less than 5% churn in recurring revenue.
“Our technology industry clients and their investors appear well-positioned to withstand the immediate negative impacts of COVID-19,” said Cole Bader, Co-Head of the Stifel Global Technology Group. “While a natural slowdown in activity is expected, we believe that technology will be the key driver of a global economic recovery and the sector will continue to grow strongly post-pandemic.”
Read More: Simple Announces Launch of Tax Refund Feature to Automate Savings for Customers
