European Mid-market Private Equity Forecast: 2022

Report 14 July

European Mid-market Private Equity Forecast: 2022

Turning volatility into advantage

European Mid-market Private Equity Forecast: 2022, in association with Third Bridge, features a survey of European GPs across mid-market fund sizes to understand their thinking at this uncertain stage in the market cycle and how they intend to position themselves.

Our findings show that managers whose last fund was worth €500m or more, in particular, are surprisingly bullish in today’s environment, more so than their smaller counterparts.

Highlights include:

  • Mid-market PE expects a busy year, as markets navigate very choppy waters: Most respondents in our survey expect the level of new acquisitions they make to increase or stay the same in the coming year. There is a notable split, however, between funds of different sizes: 42% of respondents whose last fund was worth €500m or more anticipate a significant increase in the number of acquisitions they make next year, compared with only 7% among those whose last fund was worth €50m or less.  
  • Exits are on the cards for many in the months ahead: More than half (55%) of respondents representing funds worth €500m+ expect the number of divestments they make in the next year to increase, including 26% who expect the number to increase significantly. In contrast, only 10% of respondents representing funds worth €50m or less and funds worth between €50m and €500m, expect the number of divestments they make to rise significantly in the coming year.
  • New markets are attracting the attention of larger funds: Almost two-thirds (61%) of respondents from funds worth €500m+ plan to prioritise diversifying into new geographic markets in the next year, with 52% saying they will focus on entering new industries. At the other end of the scale, no managers of funds worth €50m or less expect to focus their efforts on diversifying into a new geographical market, while 17% plan to diversify into new industries.
  • Regulatory pressures—from antitrust to ESG—are influencing PE investment decisions: Two-thirds of those representing funds worth less than €50m expect a more aggressive regulatory environment to be one of the big factors that will have the greatest impact on their activity. For managers at the larger end of the scale, the concern is more about the burden of ever-increasing antitrust scrutiny.
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