The Historical Impact of Economic Downturns on Private Equity

An assessment of private equity return patterns in three recent significant downturns.

In light of recent market volatility, Neuberger Berman’s Private Equity and Institutional Solutions teams analyzed historical private equity market performance during three recent periods of market distress. We performed this analysis to gain perspective on current conditions with the understanding that the dynamics behind recent volatility may be quite different from the past. Focusing on the major economic downturn of the early 2000s, the 2007 – 09 global financial crisis, and the 2020 COVID-related market events, we found that private equity historically experienced a less significant drawdown, and a quicker recovery, than public equities in all three cases. We also noted a lag in the slowing of capital calls and a more immediate drop in distributions, both of which resumed as the economy and public markets regained their footing. Our findings are detailed below.