Best/Worst Practice Areas During Downmarket/Recession

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Best/Worst Practice Areas During Downmarket/Recession

Postby Anonymous User » Wed Dec 20, 2017 12:03 pm

Considering a lateral move as a mid-level within biglaw. I'm currently general M&A and after move would be almost exclusively doing private equity. Since we're overdue for a market correction, was hoping to get some insight from folks who were in biglaw from '08-12 on what practice areas in particular were hit hard. Specifically interested in PE, but thought broadly started this could be useful generally.

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Re: Best/Worst Practice Areas During Downmarket/Recession

Postby Anonymous User » Wed Dec 20, 2017 1:22 pm

PE is likely safer than general public company M&A due to PE's propensity to buy low, etc.

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Re: Best/Worst Practice Areas During Downmarket/Recession

Postby 2014 » Wed Dec 20, 2017 3:10 pm

Probably worth a couple of minutes googling the new firm's main PE clients and seeing if you can find out what stage of fund raising they are in (ideally they will have just closed or be close to closing a round on a new fund), but agree with above that PE is among the more recession proof corporate practices. Only concern would be if by some chance you are representing clients that are primarily focused on selling off their portfolio, the inevitable crash is going to hit them worse - particularly if they have used up substantially all of their invest-able capital already and are therefore handcuffed from pursuing buy-side deals.

Was not around in 08-12 however, so others will have to reply with the anecdata you are looking for there.

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Re: Best/Worst Practice Areas During Downmarket/Recession

Postby EliotAlderson » Wed Dec 20, 2017 3:26 pm

Most PE firms are buying and selling at the same time. A successor fund is being raised while the current fund is investing and near the end of its commitment period (or almost out of commitments). Take a look at the track record some of the public sponsors. IRRs of the funds selling in 2008, 2009 and 2010 vs those buying.

Agree that PE withstands a correction better than corporate. Had a conversation with a client who was in IB at the dot com crash and then PE in the housing crash. Said more stress in the dot com then PE. Though carry likely took a hit as a result of the housing crash. Note that is not to say PE doesn’t take a hit. PCs will be held longer in a downturn if the intrinsic value is there.

Caveat — not around in 2008-2012.



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