While investors and the media focus on the private credit redemption crisis in the US, attention should also turn to Europe, where exits—key to both distributions and redemptions—fell abruptly in Q1 2026, according to Pitchbook data.

Nicolas Moura, senior research analyst, EMEA Private Capital at Pitchbook and the author of the report “European PE Breakdown,” told Paperjam in written comments that there is “very limited spillover” from the US private credit turmoil to Europe. “It is more of a confidence effect, if any.”

European PE market bifurcates on exit activity

Total exit value declined by 9.5% quarter-on-quarter, while exit count dropped more sharply by 31.3% (see chart 1), signalling a genuine slowdown in transaction flow rather than a temporary pause. Pitchbook noted that these developments reflect a more cautious market backdrop, shaped by geopolitical uncertainty and tighter financial conditions.

Despite this, exit value remained 34.4% higher than in Q1 2025, suggesting that momentum from a strong end to 2025 continued to support larger transactions.

A key feature of the quarter was the divergence between value and volume. While fewer exits were completed, aggregate value held up due to a concentration of activity in the large-cap segment. Mega exits dominated, with just 16 transactions accounting for 67.9% of total exit value. This dynamic is also reflected in the structure of exit activity. Liquidity is returning at the top end, while mid-market and smaller exits remain constrained.

Sponsor-to-sponsor deals dominate exit market

The structure of exit activity reveals an even more significant shift. Sponsor-to-sponsor transactions became the overwhelming source of liquidity, representing 76.1% of total exit value, up sharply from 49.6% in 2025. This points to the near-closure of alternative exit routes, potentially prolonging holding periods and delaying distributions to LPs (see chart 2).

The IPO window remained effectively shut, with only one small listing completed during the quarter, as volatile public markets and weak investor appetite discouraged new offerings. At the same time, corporate acquirers stepped back, likely due to higher financing costs, balance sheet pressures, and broader macroeconomic uncertainty.

As a result, private equity firms are increasingly reliant on each other to realise investments, effectively recycling assets within the ecosystem. While this dynamic sustains deal activity in the short term, it raises questions around price discovery (i.e., how accurately assets are valued in a constrained buyer pool) and valuation robustness, given the reduced diversity of buyers and the absence of strategic premium bidders.

UK leads as European exit market diverges

Geographically, exit performance was uneven. The UK and Ireland emerged as relative bright spots, recording €26.1bn in exit value—their strongest quarter since Q3 2023. This underscores both the region’s depth as Europe’s leading private equity hub and the continued prevalence of secondary buyouts. The UK also saw early activity on the Private Intermittent Securities and Capital Exchange System (PISCES), a new regulated platform enabling intermittent trading of private company shares—marking a potentially important expansion of exit options.

In contrast, France experienced a marked slowdown, posting its weakest quarter since Q2 2020, underscoring a two-speed recovery across Europe. Central and Eastern Europe benefited from a single large transaction (InPost valued at €7.8bn), while most other regions saw subdued activity.

B2C exits collapse amid weak demand

Sector trends further illustrate the market’s defensive tilt. B2B assets accounted for roughly half of total exit value (see chart 3), doubling quarter-on-quarter as investors favoured businesses with recurring revenues and predictable cash flows.

Other resilient sectors included financial services, healthcare, and materials, where earnings visibility supports underwriting in uncertain conditions. By contrast, B2C exits declined sharply, with value falling 70.5% quarter-on-quarter, reflecting weaker consumer demand and greater sensitivity to macroeconomic pressures.

Overall, the European exit environment in Q1 2026 was characterised by concentration, caution, and limited liquidity channels. While large-cap transactions continue to provide some momentum, the broader market remains constrained, with recovery dependent on improved macro stability, reopening of public markets, and the return of strategic buyers.

Until these conditions improve, exit activity is likely to remain concentrated at the top end of the market, with limited relief for mid-market liquidity.