Being a volatile ecosystem, susceptible to external shocks and global uncertainties, not the least because it is a mono-economy determined mainly by oil revenues, the Nigerian economy has come under additional strain on account of the COVID-19 pandemic, presenting an uncertain outlook for many businesses.
In broad terms, given the general economic slowdown occasioned by the spread of the coronavirus and the extraordinary measures put in place by governments across the world in order to contain the virus and prevent its spread, different businesses and industry sectors are likely to be impacted in one form or the other. Quarantines, travel restrictions, disruption in global supply chains and the volatility of global markets will impact a broad spectrum of industries, including the private equity (PE) industry. The general expectations are that deal activity will slow down considerably, valuation of target companies will be impacted, more deals will feature liquidation preferences and other investor-friendly terms, and investments made on projections which are no longer feasible will be impacted.
In this paper, we examine the overall impact of the COVID-19 pandemic on the PE industry, particularly in Nigeria, and we provide key legal insights that stakeholders at different ends of the value chain need to keep in mind for the immediate future, including the impact of the pandemic on the key aspects of PE – fundraising and investments.
