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European Private Equity Outlook 2015

2015

The European private equity industry is looking to the new year with caution: whereas 82 percent of market players expected transaction numbers to rise in 2014, this year the figure is just 62 percent. And 18 percent even expect the market to shrink, according to the findings of the latest study, "European Private Equity Outlook 2015", by Roland Berger Strategy Consultants.

"Europe's private equity market is still growing, although the euphoria of last year has died down somewhat," says Roland Berger Partner Gerd Sievers. "The industry's success depends partly on the availability of attractive targets. But the volatility of the markets often has a negative impact on international acquisitions, too."

The first signs of a cool-down surfaced back in 2014, with around one third of survey respondents closing fewer transactions than anticipated. Their main reasons were the lack of attractive targets (28%) and the worsening geopolitical development as well as the pricing of targets, both coming in at 22 percent.

The trend is continuing into 2015, with Europe's M&A markets set to see slower growth. The UK, the biggest market for corporate takeovers, is expected to see no more than about a 2 percentage point increase, with the Iberian peninsula and Italy each anticipating some 1.8 percent growth. The German acquisitions market is set to grow 1.7 percent. Bringing up the rear are France, Austria and Switzerland, where the PE experts anticipate no more than 0.5 percent growth in transactions. The only market set to grow slightly – for the first time in three years – is Greece (0.6%).

In terms of the industries deemed most relevant, pharmaceuticals and healthcare (49%), consumer goods and retail (48%), and technology and media (46%) remain the frontrunners. The automotive industry (10%) and the chemical sector (13%), on the other hand, feature fewer acquisitions. The energy sector is also very weak (22%). "The radical industry transformation that the changes in energy policy were expected to bring has so far failed to materialize," comments Sievers.

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