In the seventh edition of our “European Private Equity Outlook”, we’ve complied the knowledge of over 2,600 experts to offer a comprehensive overview of the continent’s PE sector in 2016. We address topics including European PE development, key challenges, and business models as well as looking at areas of anticipated growth: M&A transactions in technology and media, pharma/healthcare, and consumer goods and retail with a modest continuation of the overall upward trend. Significant improvements in the industry are anticipated in comparison to 2015, yet, while overall growth is forecasted for 2016, experts advocate cautious optimism to deal with the challenges ahead.
One area of particular concern to development is political stability in Europe. Deterioration due to the refugee crisis is sited as the most influential factor in the number of M&A transactions in European PE in 2016. Faster growth rates than 2015 are anticipated, with Germany, Iberia, and Italy leading the markets. As seen in 2014 and 2015, new investments continue to be a priority in PE value chains, bolstered by an increase in divesting existing investments. Concurrently, almost no change is forecasted in competitive fundraising. The report notes that fewer of the professionals surveyed anticipate an increase in attractive target availability than in 2015, with secondary buy-outs and family-owned companies leading the results.
An overwhelming majority of PE managers agreed: the key to successful future portfolios is in active management and a significant decline will be seen in passive approaches. In parallel, 32% of experts surveyed named weak change management capabilities as the greatest hindrance to value creation measures. Looking towards the future, professionals remain divided on the long-term sustainability of PE business models, citing a need for adaptation and improvement. On par with previous predictions, our experts foresee a slightly more confident outlook than in past years. These and other key takeaways are examined in this exclusive report for private equity professionals looking to create value from financial conditions in the European sector.
The continued availability of inexpensive debt financing and positive sentiment concerning the economic situation in Europe serve to roll the cautiously optimistic mood in the PE industry over into 2016.
