COVID-19 has introduced new challenges in the private equity sector. Gavin Geminder, National Sector Leader for Private Equity, explains how KPMG supports firms in critical areas, including accessing and accounting for stimulus program loans, seizing tax opportunities of the CARES Act, overcoming liquidity and working capital challenges, and managing the unprecedented decline in portfolio company valuations.
Hello, I'm Gavin Chaminda, the National Sector Leader for KPMG's U.S. Private Equity practice. I'm going to spend a couple of minutes just giving you my personal perspective on what I'm seeing in the industry, in what is clearly unprecedented times.
Before doing that, I just wanted to say that I hope each one of you and your families are healthy and safe. I know that we all know of individuals and family members that are struggling and I could only wish in those cases that there is a speedy recovery.
There's really, of the many areas that we can focus on, the five areas I really just wanted to highlight right now are clearly the focus on the stimulus package, where we are assisting clients around the SBA program, and the other funding programs.
Specifically around the accounting for and access to the payment protection program. As, limited of course, at this time by the affiliation rules. Not solely around the payment protection program, but of course there's the other Treasury lending facilities which are still being rolled out as we speak. The exact rules underlying that program yet to be determined.
Then of course there are the multiple tax opportunities around the provision of the CARES Act. Particularly around NOLs, the carry-back, and the eighty percent limitation rule, which is being temporarily removed.
Then there's the deductibility of interest expense and the acceleration of the minimum tax credits.
Thirdly, naturally the focus around portfolio company liquidity and working capital support. Another major request and support we are providing to our private equity clients and their extended portfolio companies.
Another area focus is naturally valuations, particularly of the portfolio, as a result of unprecedented decline in the valuation marks as of the first quarter, you know as of the end of March. Another big topic of conversation we are having, and going to be having, clearly with our clients.
And then of course there's the support we're providing to the portfolio companies as they're dealing with going concern opinions. What that means and an extension of that related to our lending facilities and covenant breaches or potential covenant breaches and how we are looking to help companies as they renegotiate their facilities and assess the covenants that sit within them.
I look forward to interacting with any, of you and on behalf of broader private equity at KPMG,
I want you to know that we are here to help support and advise in any way that is needed. Thank you very much.