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When will the knot unravel? Private equity in the DACH region, July 2024

When will the knot unravel? Private equity in the DACH region, July 2024

July 19, 2024

Transaction volumes remain low, but the outlook is brighter according to our latest industry update

With the PE market bottoming out in H1 2024, the outlook for H2 2024 and beyond appears more promising. In this update, the latest in our bi-annual series on the DACH PE sector, we assess the impact of the challenges and look at future growth opportunities.

The DACH PE market ranks second in Europe after the UK and Ireland in terms of total
transaction volume, followed by France and the Nordics.
The DACH PE market ranks second in Europe after the UK and Ireland in terms of total transaction volume, followed by France and the Nordics.
"The PE market may have bottomed out in H1 2024 and there are signs of optimism for H2 2024 and beyond."
Portrait of Martin Weissbart
Principal
Munich Office, Central Europe

With more than 400 active private equity (PE) funds and 379 transactions in 2023, the DACH region (Germany, Austria, Switzerland) is one of the key centers for private capital deployment in Europe. In terms of total transaction volume, it currently ranks second behind only the UK and Ireland.

Much like the rest of the continent, the PE sector in the DACH region has endured a decline of late. In 2023, PE transactions decreased by around 24% across Europe as a whole, with the DACH region also registering a 23% drop. The primary reason for the general decline has been the difficulties with debt financing.

2024 off to a weak start

With macroeconomic disruptions persisting, the first half of 2024 has continued in similar fashion: there were 143 transactions in the DACH region, which is the lowest half-year period since 2014. Buy-side investors are still hesitant to invest as multiples remain high and interest rates uncertain, indicating deal volume for 2024 may show another decline after 2023.

Tech and business services key for deals

Technology, software & digital solutions and business services & logistics were the main sources of deals in 2023, with the two sectors accounting for more than 50% of deals in the DACH region.

From 2022 to 2023, all sectors experienced declines apart from automotive and energy & utilities, with building & construction being the most affected. The strongest long-term growth was seen in technology, software & digital.

Outlook for H2 2024 and beyond

The PE market may have bottomed out in H1 2024 and there are signs of optimism for H2 2024 and beyond. The cautious mood has led to PE firms in the DACH region accumulating ‘dry powder’ or more than EUR 100 billion, ready to be deployed.

We have identified five key takeaways to help firms in the DACH PE sector prepare for a shift in momentum.

  1. Stagnation in mid-cap and large-cap investments is set to remain into the end of the year and beyond, but small caps look more resilient.
  2. Continuation funds are enabling PE firms to extend investment periods. Meanwhile, refinancing activities are expected to become more popular to mitigate continued high interest rates.
  3. PE firms will increasingly focus on closer engagement with assets, sometimes resulting in early screening for auctions or exclusive negotiations, especially for the limited number of high-quality assets in the market.
  4. Corporate carve-outs are becoming an increasingly attractive channel for attractive assets. Establishing these businesses as standalone entities with dedicated management and revised strategies can unlock growth opportunities often overlooked within larger enterprises.
  5. The continued stagnation in the large-cap and mid-cap segments is likely to see continued pricing mismatch between the buy and sell sides.

Register now to download the full PDF or if you'd like to subscribe to future updates on the PE sector. The full report includes key insights, buyout deals in the region, and new developments as well as future challenges and new opportunities for players in the financing industry.

Download the full PDF here
STUDY

When will the knot unravel? Private equity in the DACH region, July 2024

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Transaction volumes remain low, but the outlook is brighter according to Roland Berger’s latest private equity analysis for the DACH region.

Published July 2024. Available in
Deep-dive France
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When will the knot unravel? Private equity in France, July 2024

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The deal volume in France declined by 8% from 256 deals in 2022 to 235 in 2023. H1 2024 marks a weak start into the year, with ongoing macro-economic disruptions continuing to impact transaction volumes since 2022.

Published July 2024. Available in
Deep-dive Italy
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When will the knot unravel? Private equity in Italy, July 2024

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The deal volume in Italy declined by 27 % from 212 deals in 2022 to 154 in 2023. H1 2024 marks the weakest half-year, with ongoing macro-economic disruptions continuing to impact transaction volumes since 2022.

Published July 2024. Available in
Deep-dive Nordics
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When will the knot unravel? Private equity in the Nordics, July 2024

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The deal volume in the Nordics region declined by 47% from 445 deals in 2022 to 235 in 2023. H1 2024 marks the weakest half-year since 2013, with ongoing macroeconomic disruptions continuing to impact transaction volumes since 2022.

Published August 2024. Available in
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When will the knot unravel? Private equity in Spain & Portugal, September 2024

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The deal volume in Spain & Portugal declined by 32% from 202 deals in 2022 to 137 in 2023. H1 2024 marks a stronger start of the year (+13% in transaction volume vs. H1 2023), yet with ongoing macro-economic disruptions continuing to delay many sell sides.

Published September 2024. Available in
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