Europe’s private equity market reaches highest level in decade

15 April 2019

Europe’s private equity market has reached its highest level in a decade. The number of deals climbed 5.3% to 2,168 deals, together generating €262 billion in deal value, up 9% year-on-year.

The data, which stems from PwC’s ‘Private Equity Trend Report 2019’, shows that financial investors have ramped up their activity in buying and selling enterprises. “The private equity sector has for the first time returned to the pre-crisis level,” concluded the authors.

The uplift was entirely driven by buyouts rather than exits, a trend that was observed across Europe’s constituent national markets. 1,566 transactions were made, representing an annual increase of 11% to set yet a new post-crisis record. On a value basis, buyouts surged by 25% year-on-year to €175 billion, again the highest figure since the global financial crisis, as there was a stronger weighting towards larger deals.European Buyout Trends, 2013-2018

The largest buyout of 2018 was in the Benelux market: the takeover of Dutch chemicals group Nouryon, formerly the specialty chemicals division of AkzoNobel, by Carlyle Group and Singaporean sovereign wealth fund GIC. With a value of €10.1 billion, this deal accounted for one fifth of the top ten buyouts (€51 billion). In total, there were 47 buyouts valued at more than €1 billion, an annual uplift of 57% on the 30 European megadeals recorded in 2017. 

The second-largest deal of the year saw CVC Capital Partners, Public Sector Pension Investment Board and StepStone Group acquire Italian pharmaceuticals group Recordati for €6.3 billion. Spain claimed three of the top ten buyouts: CaixaBank, bought by Lone Star Funds for €5.6 billion; Naturgy, a 20% stake in which was acquired by CVC Capital Partners and Corporacion Financiera Alba; and Itinere Infraestructuras, 59% of which was purchased by Corsair Capital and APG Group.

Meanwhile, Germany and the UK were the only other countries to have more than one deal in the top ten in 2018. In Germany, Caisse de Depot et Placement du Quebec, Ontario Teachers’ Pension Plan and Partners Group bought industrial automation company Techem for €4.6 billion.

Exits subdued

Exits were however a different story in 2018, with activity being far more subdued than on the buyout front. There were 945 company sales during the year worth a combined €139 billion. This represents annual falls of -4.5% and -13.1% respectively, and the weakest exit activity since 2014.European Exit Trends, 2013-2018

The largest sale of the year was a 50% stake in Gatwick Airport, divested by Global Infrastructure Partners to VINCI Airports, in a deal valued at €6 billion. The UK is the only country in Europe in 2018 that had more than one top ten exit, claiming four spots. The remaining three were Sky Betting and Gaming, sold by CVC Capital Partners to The Stars Group for €4.5 billion; pharma group BTG, sold for €3.5 billion; and EMI Music Publishing, acquired by Sony Corporation from Mubadala Investment Company for €3 billion.


The UK and Ireland have more or less held firm, accounting for 23% of buyouts between 2013 and 2016 and 22% of deals between 2017 and 2018. But in value terms, the region’s dominance has dropped from 31% to 23% over the same time period. This is almost certainly a direct consequence of Brexit, highlight the authors. “Either large fund managers, which have broad and diverse geographic remits, are turning their attention towards other markets, or firms are opting for smaller deals to reduce their exposure to a market mired in uncertainty, or a combination of the two,” stated Steve Roberts, Private Equity Leader at PwC. 

Other key private equity markets such as Germany, France and the Nordics have seen little change in their share of deal flow in the last five years.


Looking to 2019, the private equity sector is across the board positive about the economic outlook. More than two thirds of the 250 European financial investors surveyed believed that the global economy will grow this year. In addition, more than three quarters of the respondents do not think that the next financial crisis will occur within the next three years. There are, however, concerns about increasing geo-political tension and its impact on trade and the upcoming Brexit.European Private Equity Trends, 2013-2018

On the back of the outlook, optimism is also fare for the private equity industry itself. Nearly three-quarters (72%) said they expect competition for investments among private equity firms to increase in 2019, including 28% who said they expect it to increase significantly.

The largest concern private equity experts have lies in the growing competition: nearly three-quarters (72%) of respondents pointed at scarcity in investment opportunities over the next five years as one of the top three issues they foresee facing. In the last 20 years, the number of investment companies in Europe has more than doubled from 1,453 to 3,530. According to a Boston Consulting Group report, investors now manage more than $2,500 billion in assets under management. 

Meanwhile, the piling cash reserves that are being left idle (‘dry powder’) is leading to steadily increasing purchase multiples, making the job of private equity funds all the more challenging. While there is unlikely to be shortage of companies to acquire, the real question is according to PwC’s experts whether there will be enough investable companies, at fair valuations, to absorb the record level of dry powder that exists in the system.

"These developments indicate that private equity must transform,” said Roberts. “To achieve this the industry will need to continue to adapt, to drive deep value creation through their portfolio companies in highly focused and continuingly more innovative ways, whilst still finding the time and capacity to deploy capital on new deals.” Most respondents see operational improvement initiatives and digital innovation as the main drivers for change.


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Maine Pointe discusses how analytics helps private equity improve due diligence

01 April 2019

Mark McTigue and Michael Kirstein, Vice President Private Equity and Vice President Europe at Maine Pointe, discuss why private equity firms are increasingly deploying data analytics to help them buy right and buy smart in a challenging market.

It comes as no surprise that the market for private equity acquisitions continues to be robust. Global deal value increased from $594 billion in 2015 to $825 billion in 2018 and that’s nothing compared with the predictions for 2019. 

Buoyed by low interest rates, an eager supply of deal financing and a prolonged period of economic growth, private equity has plenty of dry powder and has proved to be resistant to the impact of trade wars, tariffs and political uncertainty. However, not all factors are positive. Valuation multiples remain high and there’s considerable competition among private equity firms to find and acquire those elusive “diamonds in the rough.” At the same time, corporate “strategics” looking for suitable acquisitions to support their growth, are offering a viable alternative for firms considering sale. 

With these competitive factors, how can private equity firms gain an advantage over their competitors, make smarter buying decisions, and speed up the value creation process? The answer lies in operational due diligence (ODD) and the timely use of data analytics (DA) and artificial intelligence (AI) in assessing target companies.

How data analytics helps private equity improve due diligence

How to pick winners in a challenging market

Private equity firms across all industries are increasingly making use of data analytics and operational due diligence to:

  • Identify and screen fast-growth businesses
  • Determine with confidence where the opportunities for value creation lie
  • Quickly identify potential deal breakers and underlying commercial risks

In recent years, we’ve seen a number of data analytics tools emerge which are capable of significantly accelerating the process. These tools allow data extracted from multiple entities to be organized, assembled, cleansed and visualized. AI tools are also able to scour thousands of files and contracts, targeting keywords and clauses, further speeding up the ODD process. This is particularly important for firms with multiple add-ons and minimal integration.

The importance of TVO operational due diligence

Total Value Optimization (TVO) operational due diligence, based on a foundation of data analytics, cuts through the noise and gets straight to the facts which sound decision-making is based on. This helps private equity firms identify target companies, analyse their potential and implement the necessary cross-functional processes to accelerate time-to-value creation.

Due diligence provides fast, accurate visibility of the financial information private equity firms need. What differs with a total value approach is its ability to identify supply chain and operations-oriented value creation opportunities both pre- and post-acquisition. This enables private equity executives to quantify EBITDA improvements together with working capital risks and opportunities. These are coupled with an implementation road map for the first 180 days and beyond with an emphasis on quick wins to support positive internal rates of return (IRRs) in year one.

Driving value throughout the life-cycle

While many private equity executives are realizing the value of technology throughout the operational due diligence process, less adept companies are continuing down the well-worn acquisition path. In today’s world, this could mean losing out to their smarter and more nimble competitors who are already using data analytics and artificial intelligence to generate and close more transactions, earn higher rates of return, and lower risk.