57% of PE professionals postponed their planned exits for 2023

The pandemic, inflation, increasing interest rates, and the wars in Ukraine and Israel all impacted exit potential. A significant percentage of Investment managers in Europe consequently postponed their exits for 2023 (57%). The average investment horizon increased to 13 months.

These are some of the findings of the annual European Private Equity monitor by Dealsuite. For this research report, 512 Private Equity professionals operating in Europe took part in the survey. The study aims to provide valuable insights about Private Equity to board members, entrepreneurs and other professionals in the sector.

Majority of PE professionals postponed their exits for 2023
The pandemic, inflation, increasing interest rates and the wars in Ukraine and Israël all had a
significant impact on market conditions in the previous years, influencing exit potential.
From the respondents that planned an exit in 2023, 42% have executed the exits according to plan. 57% of respondents report to have postponed the planned exits, and 1% executed the exit earlier than originally planned.

Significant increase in the average investment horizon
The exact timing of an exit depends on a variety of factors, some company-specific and some dependent on the broader economic landscape. 81% of PE professionals report an increase in the investment horizon between 2020 and 2023. On average, the investment horizon increased by 13 months.

Raising capital proven to be difficult
From the PE professionals that have raised capital in 2023, the majority reports that fundraising has become more difficult in 2023 (71%). 6% of PE professionals experienced more ease in raising capital. 37% of all respondents expect that raising capital will become even more difficult in 2024.

Increased interest in the lower mid-market
Traditionally, PE firms are known for favouring the bigger deals. Now there is an increasing interest to also consider companies active in the lower mid-market. “At Dealsuite we see an increasing interest of PE firms in the lower mid-market. This is partly triggered because debt financing has become more difficult and expensive. Yet, also the midterm trend shows an increased interest for the lower mid-market as this market consists of many potential targets, opportunities for revenue growth and cost reduction are widely available and ‘multiple arbitrage’ is an easy win. Furthermore, smaller companies provide an accessible route to portfolio diversification.” Explains Floyd Plettenberg, CEO at Dealsuite.” 73% of survey respondents agree that PE firms are considering more targets in the lower mid-market.

Can we expect more acquisitions in 2024?
The expectations for Private Equity in 2024 are diverse. 47% of respondents expect more acquisitions in 2024. 22% of respondents have negative expectations for the performance of exits in 2024, while 39% express optimistic expectations.