PitchBook noted in a new research report that if they had to pick just one word to accurately summarize European private equity (PE) in 2024, it would actually be “recovery.”
According to the update from PitchBook, annual private equity deal value increased 35.4% year over year (YoY) while “annual deal count increased 18.2% YoY, marking the third best year of dealmaking in European PE after 2021 and 2022.”
PitchBook further noted that although dealmaking grew, the “drivers of this growth changed from those in previous years.”
The research report from PitchBook also mentioned that in 2024, US investor participation returned, “take-privates continued to thrive despite bullish public markets, smaller markets such as Italy increased their dealmaking footprint, artificial intelligence & machine learning (AI & ML) took centre stage as a vertical, and the shift in monetary policy midway through the year played a pivotal role in improving macroeconomic indicators.”
Looking at the year ahead, PitchBook said that they now “remain optimistic about dealmaking as the macroeconomic landscape improves and political turmoil settles down in H1.”
PitchBook noted in their report that they expect the asset class to continue growing, “benefitting from a further democratization of private markets.”
PitchBook also mentioned that exit activity finished the year “higher than the previous two years, thanks in part to a strong Q4.”
PitchBook added that annual exit value “grew 5% YoY while annual exit count grew 18.6% YoY as sponsor acquisitions dominated over corporate acquisitions.”
More strikingly, they estimate that “exit count recovered to 2021 levels thanks to the strong year-end.”
PitchBook concluded that this is very encouraging, “as the past few years have built up a backlog of companies seeking to exit, and the end-of-year dynamics suggest that this backlog will finally start being released in 2025.”
However, PitchBook are cautious about “the optimism and remind our readers that the investment/ exit ratio remains elevated at 2.4x and the time that general partners (GPs) hold their assets before exiting increased from a median of 5.2 years in 2021 to 6.1 years in 2024.”
Fundraising in Europe in 2024 was “a two-sided story.”
On the one hand, 2024 was one of the “strongest years of fundraising, on par with 2021 and 2023.”
However, the bulk of this capital was raised “by experienced managers with
proven track records.”
PitchBook pointed out that if you were “one of the PE powerhouses in 2024, then you most likely were able to fundraise thanks to existing relationships with limited partners (LPs) and strong investor relations teams.”
Additionally, megafunds have benefitted the most “from the secular trend of PE as a growing asset class, often attracting large mandates from institutional clients such as pension funds and sovereign wealth funds.”
On the other hand, 2024 reportedly saw a decade low of “new funds coming to market, pointing to the tougher fundraising conditions faced by less experienced and first-time managers.”
The PitchBook report added that middle-market capital raised “has been declining for three consecutive years since peaking in 2021 and has been marked by longer timelines to close fundraising and lower step-ups.”
The report also revealed that regionally, the Nordics had a “record year of fundraising, while France & Benelux had its worst in a decade.”