European Private Equity Monitor 2025

Introduction

This report is the second edition of the annual European Private Equity Monitor, a research study conducted by Dealsuite, Europe’s leading platform for M&A transactions. It provides valuable insights into statistics and trends within the European Private Equity market. 523 Private Equity professionals operating in Europe provided input for this research. The aim is to provide valuable insights about Private Equity to entrepreneurs and other professionals in the sector, contributing to a positive reflection of the Private Equity domain. Dealsuite has been publishing local and regional M&A reports for many years. We firmly believe that sharing information within our network contributes to an improved quality and quantity of investment opportunities.

Floyd Plettenberg MSc. EMFC

CEO Dealsuite

Acquisitions and Exits

Half of scheduled exits in 2024 postponed. Increase in PE exits and acquisitions expected in 2025 Planned exits are often subject to delays and rescheduling. According to the Private Equity Monitor of last year, 57% of PE professionals reported postponing planned exits from their portfolio companies. When surveyed about 2024, 52% of scheduled exits were executed. Meanwhile, nearly half of respondents(48%) indicated to have postponed the planned exits.

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The expectations for 2025 are optimistic in terms of deal activity. The majority of PE professionals anticipate an increase in both exits (52%) and acquisitions (55%) in 2025.

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Raising Capital

Securing capital in 2024 remained challenging, half of respondents anticipate easier capital access in 2025

Factors such as inflation and high interest rates heavily impact the ability to raise capital. In 2023, 71% of private equity (PE) professionals reported that raising capital had become slightly or even significantly more challenging compared to the previous year. The expectations for 2024 were mixed, 47% of respondents expected raising capital to become more difficult. Looking back at 2024, 44% of professionals indicated that indeed raising capital became more difficult, one third of respondents did not notice a change and 23% of respondents reported it to have become easier.

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Expected lower interest rates and improved economic conditions in 2025 have brought some relief, with 51% of PE professionals expecting that capital-raising conditions will improve in the upcoming year. Only 17% of respondents expect raising capital to become more difficult.

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Cross-border Activity

PE firms of all sizes are becoming more internationally focused

Cross-border PE transactions were traditionally dominated by large deals, but are increasingly shifting toward the lower mid-market, supported by greater market transparency through digitalization. Today, PE firms in the lower mid-market hold over a quarter of their portfolios internationally. From acquiring foreign companies to selling to international buyers, these activities show how connected the industry has become. This growing focus on cross-border deals reflects the expanding reach of private equity worldwide. The survey reveals that French PE professionals are the most active internationally (37%), PE professionals in the Netherlands have less foreign companies in their portfolio (17%).

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On average, PE professionals expect to acquire 73% of their platform companies within their own country in the upcoming 3 years. Additionally, 35% of planned add-on acquisitions are expected to take place in foreign countries, with 6% anticipated outside of Europe.

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On average, European PE professionals are open to selling to a foreign buyer in 87% of cases, while actual sales to foreign buyers occur in 37% of cases.

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The M&A market is becoming increasingly transparent, with borders fading and digitalization making it easier to connect across countries. As these trends continue, the majority of respondents expect cross-border PE deals to increase (52%).

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Another reason to involve foreign parties in the acquisition or sale of a company is the potential for amore favorable price, whether a higher selling price or a lower acquisition price. According to data from the biannual M&A Monitor from September 2024 that is based on 599 survey responses from key European M&A advisory firms about transactions in the lower mid-market, comparing the average EBITDA multiples across various European countries shows that involving a foreign buyer or seller can often lead to better pricing outcomes.

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Add-ons

PE professionals consider add-on acquisitions for over half of their portfolio companies

Add-on acquisitions remain a key strategy for private equity firms looking to drive growth within their portfolio companies. By targeting complementary businesses, firms can realize synergies, expand market presence, and unlock additional value.

On average, private equity professionals consider add-on acquisitions for 57% of their portfolio companies.

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Identifying add-on acquisitions is a critical step in executing growth strategies. According to the survey,53% of PE professionals indicate that the PE firm itself handles this responsibility, 25% say it is managed by the platform company, while 22% report that no lead is assigned.

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Limited Partners

PE professionals experience increased pressure from Limited Partners

Pressure from Limited Partners (LPs) appears to be increasing for some private equity firms. The survey reveals that 37% of PE professionals have been experiencing slightly to significantly more pressure from LPs in the last 3 years, while 60% have not noticed any change, and 3% have experienced less pressure.

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The frequency of update requests and the demand for greater transparency from Limited Partners (LPs)have increased. According to the survey, 43% of PE professionals report that LPs are requesting more frequent updates, 56% have not observed any change. This shift reflects LPs’ growing expectations for clarity and communication around their investments.

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In terms of strategic decision-making, target selection, frequency of requesting updates, and involvement in investment strategies, the role of Limited Partners (LPs) have either increased or remained similar.

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Retrospect and Outlook

Positive expectations for private equity in 2025

Assessing the performance of the Private Equity market is based on many factors, including the ease of raising capital, the number of companies open to sell their business, the exit potential of portfolio companies, macroeconomic development, the performance of portfolio companies etc. An interpretation of these factors is needed to determine how the market will develop. The survey included both the assessments of the PE market in 2024 (retrospective) and the expectations for 2025 (projection).

Figure 10 shows the evaluation of PE activities in 2024. 26% of the respondents report a negative performance of their own portfolio companies in 2024. The performance of exits in 2024 is mixed, with32% of PE professionals sharing a negative performance, 39% of professionals have a neutral opinion about their exit performance and the remaining 29% shares a positive performance. Overall, the acquisitions performance in 2024 was positive, with 56% of PE professionals sharing a positive performance.

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The expectations for the overall performance of Private Equity in 2025 are shown in Figure 11. The majority of respondents have optimistic expectations for the performance of acquisitions and investments in 2025 (70%). The expectations for the performance of exits in 2025 are more varied.20% of respondents have pessimistic expectations, 28% have neutral expectations and 52% of the respondents have positive expectations for the scheduled exits.

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Method

The aim of this study is to provide valuable insights about Private Equity to entrepreneurs and other professionals in the sector, contributing to a positive reflection of the Private Equity domain. The survey that was the basis for this Private Equity monitor was sent to 4,000 PE professionals operating in Europe. Considering their combined input, they represent an essential part of the Private Equity market in Europe. Out of the total of 4,000 PE professionals, we received in total 523 responses.

Sources used:

• 523 survey responses from European Private Equity professionals

• Dealsuite European M&A Monitor, September 2024

• European Central Bank. (2024, October 17). Monetary policy decisions - October 2024

• European Private Equity Monitor, November 2023

This research was conducted by Jelle Stuij and Roos Bijvoet.

For further questions, please contact Maarten Reinders, CCO Dealsuite

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