Revenue growth for PE-backed assets exceeds pre-pandemic levels
Gain.pro, a leading provider of private market intelligence, is proud to announce the launch of the inaugural edition of “The State of European Private Equity” report. This comprehensive report dives into the European PE landscape, offering invaluable insights into entries, exits, multiples, add-ons, holding periods, growth rates, margins, and much more.
The report sheds light on key trends and developments shaping the European PE market. Here are some notable findings:
Entries: Buyout deal activity in 2023 was the lowest it’s been in 6 years (down 32% from peak). Energy & Materials (-18%), Services (-27%) and Industrials (-25%) sectors proved to be more resilient. Q1 2024 data shows promise with the deal count exceeding both 2023 and pre-pandemic levels.
Add-ons: Add-on activity also took a hit in 2023 (down 31% YoY). Despite the decline, the ratio of add-ons to total PE deal activity remains near the decade-high. Close to half (47%) of PE-backed businesses employ a buy-and-build strategy (making at least one acquisition), with assets in Services and Financial Services leading the charge.
Exits: Exits slowed down meaningfully in 2023 but recent data suggests that exits have now stabilized. The current environment favors strategic buyers and it is no surprise that the share of strategic exits has risen from 33% in 2018 to 48% in 2023.
Holding Periods: Roughly 56% of assets that exited in 2023/24 stayed longer than 5 years in the portfolio. The average holding period is at an all-time high of 5.8 years vs. 4.9 years in 2020. By sector, Consumer, and by region, UK&I have the longest holding periods.
Multiples: Entry and exit multiples contracted sharply in 2023 (down 25-30% from the peak). TMT and Science & Health commanded a healthy premium vs. other sectors while the discount for add-on deals narrowed vs. platform multiples.
Growth and Margins: Revenue growth for PE-backed assets was the strongest in years. PE-backed assets grew 18.8% YoY in 2023 and EBITDA margins expanded too (up 170 bps in the last 7 years).
“We are excited to unveil the inaugural edition of ‘The State of European Private Equity’ report,” said Sid Jain, head of insights of Gain.pro “This report not only provides valuable insights for industry professionals but also puts in the hands of investors a lot of industry data that they can benchmark against.”
