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European Private Equity Outlook 2018

Portrait of Christof Huth
Senior Partner
Munich Office, Central Europe
+49 89 9230-8291

The private equity industry anticipates more M&A transactions on the part of PE firms in 2018 than last year, confident that the favorable economic outlook will offset economic uncertainties like the ongoing Brexit negotiations. This is among the conclusions reached by the new "European Private Equity Outlook 2018", a study for which Roland Berger interviewed a cross-section of private equity professionals from around Europe. The most attractive industries for M&A with PE involvement are Pharma, Business Services & Logistics, and Technology, Media & Telecommunications. There is also rising interest from Chinese investors, who benefit from a large home market and access to favorable financing conditions.

Divesting existing investments is the focus of PE activity for 2018.
Divesting existing investments is the focus of PE activity for 2018.

This year PE firms will likely focus more on selling their existing investments than on making new acquisitions: Divesting existing investments is now top priority (30%), ahead of two popular activities from the past couple of years, namely making new investments (25%) and development of portfolio companies (22%). The key reason for the priority of divestments over investments may be the elevated valuation level for assets, 93 percent of professionals having mentioned the fact that multiples paid for certain acquisitions are currently overvalued.

The surveyed professionals cited majority shareholdings in family-owned companies (58%) as the main source of acquisition targets, followed by secondary buyouts (54%). When it comes to the scale of the transactions, most deals are, like last year, anticipated to fall into the small cap segment (valuations up to 100 million euros) as well as the mid cap segment (up to 500 million euros).

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European Private Equity Outlook 2018

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The private equity industry anticipates more M&A transactions on the part of PE firms in 2018 than last year.

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