The Pulse of Private Equity – 10/20/2014

Q3 Deal Flow in Europe: Speed Bumps Remain

2014 hasn’t been the banner year industry professionals were expecting in Europe. Private equity (PE), venture capital (VC) and growth investment deal counts were soft in 3Q, which likely means that 2014 will end the year well below 2013 levels, both by counts and value. That’s somewhat surprising, given the optimism that investors and industry players had entering the year. Cheap credit, high levels of dry powder and renewed confidence in the European economy were supposed to spur investments; so far, no such luck.

As many have noted, PE firms were often scuttled by the strong IPO and M&A markets, which competed for and won a number of deals that may have otherwise gone to PE sponsors. As long as equity prices remained high, PE investors were often sidelined. Recently, however, the public markets in Europe have swooned over slowing growth, chilling the ambitions of retail investors and strategic buyers. The competition that had been flummoxing PE, in other words, appears to be weakening, which may translate into a long-awaited uptick in deal counts for PE sponsors.

Contact: Adley Bowden
adley.bowden@pitchbook.com