Private equity deal value in Europe declined by 26.5% (year-over-year) in 2023 to €420.5bn a level that was nevertheless higher than 2020, the starting year of covid, but also all the prior years. The same is true for the number of deals which decreased by 16% to 6,103 transactions. “Green shoots emerged in 2023 with sectors including financial services displaying resilience, particularly with consolidation top of mind,” said Nalin Patel, PE analyst at Pitchbook.

Exits down, overall, despite successful mega-exits

Despite the announcement of “mega-exits” in 2023 such as the IPO of the UK-based chipmaker Arm, the European PE exit value declined by 18.5% to €205.2bn, a level even lower than 2020 whereas the number of exits volume was 1,009, a 31% drop over 2022.

“Exit value derived from public listings in 2023 was significantly larger than in 2022, as investors have awaited a return of public listings after a muted period,” observed Patel. He explained that “corporate acquisitions and sponsor-to-sponsor buyouts contributed the majority of exit value and volume.” 

Megafunds taking over market shares in fundraising

Despite the challenging year in terms of transactions and exits, fundraising in the European PE industry enjoyed a strong year with buyout funds raising €117.8bn, up 45% over 2022 almost reaching €118.4bn in 2021, a record year. Pitchbook explained that this was fueled by the megafunds (CVC Capital Partners, Permira, and KKR) which closed “substantial funds” in 2023. Otherwise, the number of new funds plunged by 25.9% last year.

Pitchbook: “Valuation have yet to find a bottom”

On a global basis (North America and Europe), median EV-to-Ebitda multiples continued their slide to 11.0X in 2023, down from 12.4X in 2022 and 13.2X in 2021. 2023’s median level has not been seen low since 2016 according to Pitchbook data.

The trend has been similar on EV-to-revenue multiples which declined to 2.0X in 2023, down from 2.4X and 2.6X in 2022 and 2021, respectively.