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Here’s How Goldman Sachs Private Equity Clients Prepare for Recession

Goldman Sachs’ private equity clients are bracing for a recession. “Every one of our clients is focused on being prepared for a recession,” said Alison Mass, the bank’s chairman of investment banking.

While interviewed on Bloomberg TV, Mass said the bank’s clients are creating checklists of ways in which to navigate a recession.

Mass discussed an Asia trip she made earlier this year. “I saw the head of a private equity firm that has assets all over the world,” he said. “He said he had given a recession checklist to each one of his CEOs with nine things on that checklist that he wanted all of them to work on and come back to him.”

The bank’s private equity clients are creating checklists in the event of a recession. Including asking suppliers to extend terms and put limits on capital expenditure and taking on only essential staff.
“Our clients are looking to put large amounts of capital to work, so we at Goldman Sachs are looking through our industry teams as well as around the globe at large transactions,” Mass said.

Goldman’s economists believe there is a 20% chance of recession in 2020. The bank said last month the economy could grow next year to between 2.25% and 2.5%. They expect unemployment to drop to Korean War-era lows. The bank sees market upside potentially limited by global central bank policy, mentioning the Federal Reserve and European Central Bank.

Bloomberg sees a 33% chance of recession in the U.S. within a year, and a recent survey by the National Association for Business Economics found that 72% of economists expects a recession by the end of 2021.

As Gold Silver Bitcoin wrote, Goldman Sachs holds a bullish outlook on gold for 2020, with analysts seeing prices exceed $1,600 an ounce next year. The investment bank said investors are looking for alternative investment assets.

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