Friday: Fears of headwinds and how to prepare

The economic environment is top of mind for CFOs, so what should they do about it?

“The numbers may fluctuate slightly, but this is the third consecutive quarter that US CFOs have predicted a 2020 recession,” said John Graham, a finance professor at Duke’s Fuqua School of Business on the back of its survey results this week. Duke polls CFOs from all industries, but private fund CFOs also have a looming downturn top of mind, says a survey PEI Media recently conducted with RBC Investor and Treasury Services.

So what is to be done to prepare? Certainly a strong balance sheet is a must, per this warning from a veteran investor. Here is what some CFOs told us they were doing earlier in the year, and what Michael Chae, Blackstone’s CFO, says firms should be doing.

Question everything (about fund structures)

At a convivial drinks reception last night hosted by sister publications Private Equity International and Private Debt Investor along with law firm Debevoise, one dealmaker posed the question: is there any good reason why the PE investing is done through fund structures rather than, for example, a Berkshire Hathaway-style holding company? Tax efficiency was the only reason we could come up with. Get in touch if you have a different answer.

Email prepared by Toby Mitchenall.