Private equity firms are bracing for a downturn and putting in safeguards to limit their downside risk.

“Every one of our clients is focused on being prepared for a recession,” Alison Mass, Goldman Sachs Group Inc.’s chairman of investment banking, said Tuesday in a Bloomberg TV interview.

For some, that goes beyond making sure capital structures are in order if the economy slows, she said.

“I was in Asia earlier this fall and saw the head of a private equity firm that has assets all over the world,” Mass 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 checklist included talking to suppliers and asking them to extend terms, limiting capital expenditures to critical items and hiring only essential employees, she said.

That type of due diligence by private equity firms signals concern that a recession could be looming. Currently, the consensus forecast is that there’s a 33 per cent chance of a recession in the U.S. within a year, according to data compiled by Bloomberg.

Goldman Sachs is more optimistic, pegging the probability of a recession at closer to 20 per cent, Mass said.

Mass added that she expects the push for bigger deals to continue. This year, deals of US$10 billion or more accounted for 23 per cent of the volume of private equity transactions, the highest portion ever, according to Goldman Sachs.

“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.