European Private Equity Mid-Market Monitor: Q1 2026 & Outlook
Date
5 min read
Deal volumes in the last year have held up surprisingly well. But the market remains risk-averse and so the deals have been different.
- Different buyers – fewer trade and PE platforms, more bolt-ons for PE-owned businesses
- Different structures – PE sellers have embraced the idea of selling a business they know to a buyer they know – themself, the rise of the continuation vehicle
- Different sectors – AI impacted businesses, especially software, have become almost impossible to value and blue-collar is in high demand
The market has now lost any real momentum and the current uncertainty will push deal-making to the back end of 2026 at the earliest.
Deals… but different
Market activity
Momentum is everything in deal-making, and over the last 12 months, developing momentum has been brutally checked by tariffs, by AI, and by the war in Iran.
It is therefore remarkable that the volume of European deals in the 12 months to March 2026 was only down by 3% compared to the 12 months to March 2025.
It is important to note that the last quarter to March was down 12%, largely driven by AI anxiety, and a sharp - but late - change in sentiment as a consequence of the war.
Outlook
We will repeat, for the third year in a row, private equity must start selling businesses.
But given the market shocks and the potential medium-term impact of the war in Iran, it is understandable that they won’t be starting yet. And, for the time being, we anticipate that LP’s will be understanding and patient.
There is no shortage of businesses ‘waiting to sell’. Investment banks have been appointed and preparation is underway. But few processes will launch in the current market.
Our hope is that the wars in Iran and Ukraine will end, sentiment will stabilize, and processes will launch after the summer. Should that wave be well received, we anticipate a second, stronger wave to launch at the end of the year and into 2027.
This will only make a small dent in the ever-building backlog of private equity disposals.
It will take a longer period of economic stability, a realistic view of valuation, and pragmatic deal-making to build the momentum that has been lacking in the market since the bizarre post-Covid bubble of 2021.
What's next for 2026 deal flow? Download the report >
Predicting future activity is an art and not a science and this analysis is not scientific. It is informed judgement – much like the best M&A advice.
This publication has been prepared solely for information purposes and is not intended to function as a “research report.” In particular, this means that it is not intended, nor does it contain sufficient information, to make a recommendation as to the advisability of investment in, or the value of, any security.
Additionally, this publication 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. You should not base any investment decision on this publication; any investment involves risks, including the risk of loss, and you should not invest without speaking to a financial advisor.
For additional important information regarding this publication, please see our Insights & Publications disclaimer >
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