The State of European Private Equity Report: H2 2025
Executive Summary
In this report, we go deep into the PE landscape in Europe. We share insights on entries, exits, multiples, add-ons, holding periods, growth rates, margins and much more. Here is a summary of our key findings:
Entries — We expect entries to be up 9% yoy in 2025. Interest from North American investors has been particularly strong. They now account for 30% of all entries over €10m in EBITDA (up from 21% in 2018). By sector, Services (25%), Industrials (21%) and TMT (19%) together accounted for over two-thirds of all new PE entries.
Add-ons — Add-on deal activity in 2025 is flat vs. 2023 and 2024. The narrowing gap between add-ons and platform multiples, integration challenges and higher financing costs have tempered further growth.
Exits — PE exit activity slowed down in H1 2025, relative to H2 2024. Exits were particularly challenging in DACH, Benelux and CEE markets, with pace being slower in Industrials, Consumer and Science & Health at the sector level.
Holding Periods — Holding periods are sitting near a decade-high. The median company exiting in 2025 spent 5.7 years in the portfolio, up from 4.6 years in 2020. A third of PE assets stayed longer than 7 years in the portfolio, with the Consumer sector having the highest holding period on average.
Multiples — After three consecutive years of decline, PE multiples showed early signs of recovery in 2025. By sector, TMT and Science & Health commanded a healthy premium driven by higher growth rates.
Growth and Margin — Growth for PE-backed assets is coming off cycle highs. The median PE-backed business grew 9.1% in 2024 down from 11.3% in 2023 and 19.5% in 2022. EBITDA margins have remained stable at 11.4% (flat from 11.0% in 2017).
If you have any questions about the data or the report, do not hesitate to reach out to insights@gain.pro
Chapter 01: Entries
Overall Trend
We expect PE entry activity in 2025 to be up 9% year-over-year. Investors are returning to the market, taking advantage of easing credit spreads and attractive valuations despite the uncertain macro-environment.
After a softer Q1 marked by tariff uncertainties, PE entry activity regained momentum in Q2. The rebound was further supported by a more accommodative monetary policy and easing interest rate expectations. PE multiples are also showing early signs of recovery in 2025 after three consecutive years of decline.
Entries by Sector
By sector, Services (25%), Industrials (21%) and TMT (19%) together accounted for over two-thirds of all new PE entries. At the subsector level, Manufacturing (15%), Professional Services (14%) and Software (12%) led activity.
Chapter 02: Buy-and-Build
Overall Trend
Add-on deal activity in 2025 is flat vs. 2023 and 2024. Amid a muted exit environment, sponsors have remained focused on portfolio value creation, with buy-and-build being the key strategy.
Add-ons can drive a lot of value by accelerating revenue growth and cost synergies. PE-backed businesses with over 5 acquisitions grew at a 5-year CAGR of 19.8% compared to 7.4% for businesses with no acquisitions. These businesses also benefit from improved margins. However, we do see an increase in debt to finance those acquisitions, which increases the overall risk profile of the investment.
Despite the merits, add-on activity as a % of total PE deal activity has plateaued in the last few years. The recent narrowing gap between add-ons and platform multiples, integration challenges and higher financing costs have tempered further growth.
Chapter 03: Exits
Overall Trend
Exit activity in 2025 is expected to stabilize with 4% year-over-year growth. Despite pressure on exits in order to generate LP liquidity and the focus on DPI, the pace of exits relative to the portfolio backlog remains slow.
Compared to the second half of last year, PE exit activity slowed down in the first half of 2025. The year started with caution due to tariffs, trade and macro uncertainty. But as the year has progressed, we are seeing exits pick up, particularly with easing credit conditions and fund lifecycle pressures.
Holding Periods
Holding periods for PE assets are sitting near a decade-high in Europe. The median company exiting in 2025 spent 5.7 years in the portfolio, up from 4.6 years in 2020. Holding periods remain a key focus area for both GPs and LPs, given their significant impact on performance metrics such as IRR and DPI.
Chapter 04: Multiples
Overall Trend
Multiples are showing early signs of recovery in 2025 after three consecutive years of decline. The rebound is supported by improving financing conditions and renewed investor confidence despite macro and trade uncertainty. Looking ahead, we expect multiples to stabilize from here on as we stay in this higher interest rate environment for longer.
Growth remains the #1 factor for an asset's valuation and multiple. Assets that grow faster (>25% revenue CAGR) sell at ~50% premium to those that grow slower (<5% revenue CAGR).
Multiples increase with the company’s profitability. Investors readily pay a premium for businesses that are high quality and resilient. High operational efficiency and strong cash flows also de-risk the transaction for the buyer.
