2024 challenges set the stage for a promising year ahead in Private Equity

The European Private Equity market is showing conservative signs of recovery after a challenging 2024. With nearly half of scheduled exits postponed in 2024, more exits and acquisitions are expected in 2025. Raising capital remains challenging, but is expected to improve.

These are the most important findings of the European Private Equity monitor, the annual survey from Dealsuite that looks into Private Equity market trends. Based on the input of 523 PE professionals across Europe active in the mid-market. 

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Many exits postponed in 2024, expected uptick in 2025

Caution has prevailed in the private equity (PE) market for over two years. Last year, 57% of planned exits were postponed at the projection of better exit results. In 2024, 48% of the planned exits were postponed, showing a slight decline. PE professionals are predominantly optimistic about 2025, expecting both an increase in the number of exits and improved performance of those completed.

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Capital raising remains challenging, but expectations improve

In 2024, raising capital proved difficult for many PE firms, contributing to a decline in the number of acquisitions. Sustained high interest rates led to an increase in alternative deal structures and direct lending. 2024 was a challenging year, with 2025 anticipated to bring a more favorable environment for capital raising. 51% of PE professionals expect capital-raising conditions to improve, while 32% predict they will stay the same.

As Jelle Stuij, COO of Dealsuite, explains: "In a market where capital raising is particularly challenging, general partners are focusing on optimizing the performance of their current portfolio companies to meet the expectations of their Limited Partners, who are seeking strong returns. This drive to deliver value has led to a strategic focus on operational improvements and, in many cases, add-on acquisitions. These acquisitions help firms strengthen their portfolios, generate immediate synergies, and ultimately position themselves for better returns once capital-raising conditions improve in 2025 and 2026."

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Rising pressure from Limited Partners

The involvement of Limited Partners (LPs) - investors who provide capital to private equity firms but traditionally don’t have a role in the day-to-day management - seems to be increasing. While most PE professionals (60%) don’t note a significant change of LPs involvement over the past 3 years, a growing number (37%) have experienced increased pressure. This is particularly evident in the frequency of requested updates and the demand for greater transparency with four out of ten respondents (43%) reporting increased expectations. Additionally, Limited Partners are starting to play a larger role in areas such as target selection, investment strategies, and strategic decision-making.

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Increased focus on cross-border and add-on deals

Mid-market Private equity firms are increasingly focusing on cross-border transactions, fuelled by improved access to data and technology. On average, a quarter of their portfolio no longer comprises domestic companies, and a foreign buyer is considered in 87% of all exits. Add-ons continue to be a key growth strategy, with 57% of all PE owned companies currently considering add-ons.

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Private Equity in 2025: strong expectations despite mixed performance in 2024

The outlook for Private Equity in 2025 is cautiously optimistic. While 26% of respondents reflect negatively on the performance for their portfolio companies in 2024, and the performance of exits has been mixed—32% negative, 39% neutral, and 29% positive—the expectations for 2025 are more optimistic. A significant 70% of respondents anticipate strong performance in acquisitions and investments in 2025, while 57% have positive expectations for the performance of portfolio companies, indicating overall optimism for the market in the coming year.

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A resilient and evolving Private Equity landscape

The Private Equity Monitor highlights the ongoing adaptability and resilience within private equity. As firms navigate economic uncertainty, rising pressure from LPs, and shifting deal dynamics, they remain focused on value creation and long-term growth.

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To access the full report click here.

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