Leaders face many challenges as they strive to drive growth during historic and unprecedented inflation levels. While fiscal policies imposed by the Fed have helped to stave off inflation, we have already seen global IPO value plummet 73% to $91 billion in the first half of 2022 (Source: Private Equity Report Midyear 2022).
Inflation challenges in private equity range from higher financing costs, diminished equity valuations to softening pipelines and talent retention amidst a competitive labor market. The second half of the year will continue to see ramifications from the war in Ukraine and ongoing uncertainties due to shutdowns in China. To weather the storm, leaders must look to new strategies to thrive in this turbulent environment.
Understanding the Macroeconomic Landscape
The current landscape has lent itself to a challenging business environment — one that this generation of investors may not necessarily be familiar with. The ongoing unpredictability due to the Covid-19 pandemic, continued supply chain constraints, surging commodity prices and the Russia/Ukraine conflict have inadvertently contributed to today’s inflation rate.
This backdrop has contributed to several factors which subsequently have caused a demand-pull inflation scenario. Demand-pull inflation, in this case caused by rapid economic growth, government spending, money supply and inflation expectation led to a rise in prices due to a shortage in supply. The most popular example of the demand-pull concept is the economic crisis caused by the increased demand in mortgage...