• We saw strong deal activity in Q2 2022 in the Benelux regions (275 deals completed) as deal volumes exceeded those seen in Q1 2022 and the same period last year (234 deals completed)[9], driven mainly by financial sponsor activity 
  • There was, however, a reduction in the average deal value due to limited large cap deals. Given the size of the Netherlands market, the large cap segment is volatile
  • The US continued their interest in Benelux assets, leading the way on inbound acquisitions, swiftly followed by the UK
  • With increased geopolitical uncertainty, inflation of both energy products and wider consumer products - particularly those reliant on international supply chains - have triggered the lowest levels of deal activity seen last decade. As many Benelux companies have an international trade angle, these trends have had a notable impact on the economy
  • However, as the impact of the pandemic on day-to-day businesses has reduced, and we see consumers continue to spend, underlying growth of many companies is still at healthy levels.
  • We are seeing the challenge of attracting and retaining talent, especially for a services-oriented economy, which continues to cause disruption for many
  • The increased economic uncertainty has therefore led investors to fly to safety – deploying their capital in a few select resilient industries or through instigating additional due diligence in their valuation exercises
  • Companies which remain in high demand are those that operate in user-friendly and data-driven software solutions, ESG-linked products, and healthcare efficiency
  • That said, the geopolitical uncertainty will likely depress deal volumes for the remainder of 2022, to levels below those seen in Q2. However, we may anticipate a rebound in Q1 2023, especially once the debt markets open again. Though there may also be an increase in debt costs to reflect rising interest rates, slightly reducing valuations

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022


  • Unsurprisingly, the current geopolitical crisis and the rise of inflation has led to a perceived greater risk of an economic recession in 2023, which in turn is taking its toll on the M&A market.
  • Companies that have direct exposure to energy prices, or those that struggle to pass price increases to their customers, are unlikely to transact in the short-term
  • For others, we believe private equity funds are being extra cautious and likely focussing almost exclusively on resilient proven businesses in selected sectors - such as Healthcare, Infrastructure and Education
  • Even in the Technology sector, once the golden boot for investors, is seen to be slowing. Although tech companies usually prove to be resilient - the fall in valuations on the Nasdaq[10] has, we believe, made it harder for buyers and sellers to find a mutual agreement
  • In parallel, the debt-financing market conditions are increasingly restrictive, with the term loan B and the underwriting markets currently closed for business - particularly for large transactions. The mid-market remains open, but under stricter conditions, and through club deals and unitranche exclusively. We believe this will translate into a higher cost of debt, negatively impacting the valuation of remaining transactions
  • Focus is now on companies’ budgets for 2023, as investors look to understand the impact of the current economic and geopolitical turmoil. Investors will likely remain particularly cautious, and the robustness of 2023 budgets will likely be a key criteria for investment committees going forward

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022


  • The M&A market in Q2 2022 continues to be strongly impacted by the Russia-Ukraine conflict. Additionally, rising energy prices and looming inflation concerns[11] have meant many deals are still on a ‘wait-and-see’ basis, although strategic deals are less impacted
  • Scepticism among investment banks is noticeable in view of the situation in Ukraine and the economic slowdown. In the first five months of 2022, the global volume of mergers and acquisitions fell by approximately 20% compared with the same period of the previous year to USD 1.97TRN[12]
  • The current situation is particularly poor for new IPOs. Even if this normalizes, only a handful of IPOs are expected[13]
  • The M&A and venture capital markets in Germany is feeling the negative effects of rising key interest rates in the US and Europe
  • Rising interest base rates combined with increased scrutiny impacts private equity’s ability to finance and complete deals. The ECB raised interest rates by 50 basis points in July, followed by another 75 basis points earlier this month. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 1.25%, 1.50% and 0.75% respectively, with effect from 14 September 2022[14]
  • Financing rounds are also becoming more difficult for young tech companies, as investors have higher requirements for profitability, reflecting decreasing risk appetite[15]
  • The business situation deteriorated by 20 points, and business expectations fell by over 31 points. Investor sentiment with a view to higher interest rates are at minus 92.6 points to an all-time low[16]
  • Looking at Germany, Austria and Switzerland, the financing volume in H1 2022 fell only slightly, compared with the same period in 2021, from EUR 8.1BN to EUR 7.9BN. However, the number of deals has increased significantly, from 296 deals in H1 2021 to 368 deals in H1 2022[17]
  • A recession is expected over the course of the year, and current inflation of c.7.5% is expected to peak by early 2023 with over 10%, negatively impacting deal appetite and pricing[18]

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022


  • Private equity’s ability to finance and complete deals has been impacted by rising interest base rates and increased scrutiny. The ECB raised interest rates by 50 basis points in July[19] and, as a result, the rates on refinancing, marginal lending facilities and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022[20]
  • A recession is expected over the course of the year, and current inflation of c. 7.5% is expected to peak by early 2023 at over 10%[21]
  • Financing is now challenging for financial sponsor exits in the new interest rate environment (nearing 10pc). Expected GDP growth for 2022 remains above the EU average however, and we are still seeing deals activity in the Technology sector. Renewables and fibre deal activity also remains strong, with buyers opting for all equity funding

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022


  • In Q2 2022 under 30 deals were announced in Italy, a sharp 50% drop compared to Q2 2021 (60 deals) and Q1 2022 (40 deals). The most active sectors were industrials & chemicals, consumer, technology and pharma – accounting for c. 60% of all deal activity[22]
  • Though total deal value for Q2 2022 looks impressive –an increase of over 50% compared to Q2 2021 at EUR 50BN – this is in fact distorted by the EUR 43BN acquisition of Atlantia by Blackstone, Macquarie and CDP Equity[23]
  • We believe fundraising and related dry powder remains high in the Italian market, albeit slightly down due to the massive deployment of capital during 2021
  • Although the significant availability of capital has been a phenomenon for some years, Covid-19 accelerated a series of transformations (eg digital transformation, sustainability themes, etc), which has offered companies and entrepreneurs an opportunity for company growth and long-term stability[24]. Private equity firms have been able to bring fresh resources and experience to these businesses, driving deal flow [25]
  • Now, however, the unstable geopolitical situation in Europe, uncertainty over Italy's future politics given the recent election, and a potential recession on the horizon, risks slowing and/or reducing the level of investment currently being seen in the market

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022


  • As a result of the current climate, M&A activity in Spain has declined in H1 2022 in comparison with the same period of 2021 – with deal volumes at 1.326 (down 8% compared to 2021) and deal value totalling EUR 45.2BN (down 32% compared to 2021)[26]
  • However, Spanish private equity activity has remained strong in H1 2022, continuing the trend of private equity taking an increasing market share. Total private equity activity was worth over EUR 5.6BN in H1 2022 – an increase of 130% compared to the same period in 2021 and up 51% compared to H1 2019 – with 301 completed transactions vs 165 for the same period of 2021[27]
  • The increase in value has been driven by the closing of several large deals signed in 2021 (eg LaLiga[28], Altadia[29], and Ufinet LatAm[30]) and the announcement of new significant transactions, such as Lyntia’s acquisition by AXA IM and Swiss Life AM[31], Ardian’s acquisition of Aire Networks[32], the investment of Apollo in Primafrio[33] or KKR’s investment in IVI[34]
  • The increase deal volumes highlights the relevance of the middle market, for both national and international funds – as illustrated with notable recent transactions including KKR’s acquisition of Implika through MasterD[35], the investment of Artá in Pipas Facundo[36] and Vitruvian’s investment in Civitatis[37]
  • Additionally, the continued increase in international private equity acquirers, already accounting for 90% of the invested volume of the period, reaffirms the attractiveness of the Spanish market and its high-quality assets and competitive multiples[38]
  • Despite the positive outlook of the first half of the year, we are seeing market sentiment in Spain begin to cool, with several processes being postponed or cancelled due to the progressive deterioration of the macroeconomic situation, with inflation continuing to increase, rising interest rates, and geopolitical turmoil creating caution in investor decisions
  • However, due to the large amount of dry powder and the continued access to high-quality assets in the market, we believe investors will remain active in sectors with have proven resilient - such as Education, Technology & Software, Healthcare and Infrastructure - leading to higher deal volumes in these sectors. We believe the sectors that are more sensitive to and affected by economic changes may instead look for restructuring and strategic M&A transactions
  • The first half of the year has been active in fundraising, notably the closing of the second fund of Asterion with EUR 1.8M, the sixth fund of Nazca with a hardcap of EUR 400M or the fourth fund of Aurica, with a first closing of EUR 170M. Despite the foreseen increase of interest rates, institutional interest in private equity is expected to continue due to its risk return attractiveness compared to other assets[39]

Source: Q2 2022 European mid-market deal data, Mergermarket, 01 September 2022

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