European Private Equity Mid-Market Monitor: Q1 2025 & Outlook

Private equity 

• Private equity is the engine of M&A. Their purpose is to buy, improve, and sell businesses. It is clear that the “buy” and “sell” drive M&A, but the “improve” also frequently involves bolt-on M&A. In the statistics in this report, we have reported that they buy c.35% of businesses for sale – a significant proportion
• However, the most powerful driver of the M&A market is the rate at which they sell businesses. And there are plenty of reasons why they are not selling now

Predicting the future 

•  We have said before that M&A requires a prediction of the future, both from the vendor and from prospective buyers - and predictions of the future are very difficult 

The vendor perspective 

• Initiating a process to sell a business requires a view as to how the market will value a business. Not now, but in 6-9 months when the deal is likely to sign
• It also requires a view of how the business will perform over that period because few things undermine a sale process more effectively than “missing the numbers”
• This kind of short-term foresight is very challenging in a market as volatile as the one we are currently experiencing. Understandably, vendors are pausing their plans to sell businesses 

The buyer perspective

• We have said that 6-9 months of future prediction is challenging for vendors, but it is not as difficult as the challenge for buyers
• Buyers are required to predict the long-term performance of a business they are buying and PE 
  buyers also need to predict its future value in five or so years
• This is always a significant exercise in judgement but is now even more challenging, and it comes on the back of a market that was already tough 

Tough before tariffs 

• Many commentators predicted a pro-business environment following the election of Donald Trump, and stock markets agreed - albeit briefly
• But no such positivity was seen in European M&A markets:

Figure 1: Total deals in Europe (Q1)

Source: Mergermarket (See Appendix*)

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Disclaimer

DC Advisory has prepared this material solely for informational purposes and it is not a research report. This material does not constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of any offer to buy, or any recommendation with respect to, any securities. 

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*Appendix

Dataset for each time frame outlined, comprises all transaction volumes, with GBP 75 M and above, including those with undisclosed values, across all sectors in Europe