CMS European Private Equity Study 2025

CMS is pleased to announce the publication of the fourth edition of the CMS European Private Equity Study 2025, providing a detailed analysis of private equity transactions that CMS advised on throughout 2024.

The study examines data from over 120 PE deals across Europe, comparing key contractual terms from recent transactions with hundreds of deals reviewed in previous years. It also highlights differences between private equity M&A deals and trade M&A deals.

Key Findings: The Highs, Lows, and Emerging Trends

• Private Equity activity defies expectations: Despite economic headwinds and geopolitical tensions, private equity deal activity rose in 2024, outperforming broader M&A struggles and exceeding 2023 levels.
• A gentle rise on exits: New investments continued to dominate in 2024 at 63%, but a growing number of exits and secondary buyouts indicate some positive movement on the divestment front after the stalling of the last few years.
• Sector winners and losers: The TMT sector leads with transactions representing 24% of all deals, while the Energy & Climate sectorrebounded with 8% growth compared to 2023. In contrast, the Consumer Products sector suffered a sharp 10% decline in activity.
• Changing deal dynamics: Auction processes cooled off, dropping to 2022 levels, with only 56%involving negotiations with multiple buyers. Buyers gained ground through purchase price adjustments, rising to 42%, while earn-outs held steady at 32%, a sign that buy and build strategies continue to be a core element of private equity houses’ overall transaction activity.
• Surge in W&I Insurance adoption: The use of W&I insurancesoared from 30% in 2023 to 44% in 2024, with the number of high-value deals (over EUR 100m) where W&I was secured rising to an extraordinary 83%.
• Negotiation strengths and missed opportunities: Sellers retained strong positions particularly around limitations of liability, with sellers in higher value deals being more successfully at reducing liability caps. Buyers secured favourable terms through longer warranty liability periods and price adjustments. Despite growing interest in ESG, only 12% of PE deals included ESG-focused legal due diligence, highlighting a significant implementation gap at least when it comes to contractual commitments.

Jacob Siebert, Head of Global Private Equity at CMS, commented: “As the private equity landscape continues to evolve, our insights provide valuable guidance to investors navigating this complex environment. We are optimistic about future deal activity in Europe, particularly in sectors driven by strong fundamentals such as healthcare and technology.”

Looking Ahead: Outlook for 2025

The outlook for private equity transactions in 2025 remains positive yet tempered by prevailing uncertainties. Deal activity showed signs of improvement in late 2024, with stabilising interest rates and growing confidence in the debt markets. Exits may continue to gain traction despite sellers holding their ground on prices.

However, the tariffs storm, geopolitical tensions, fluctuating interest rates and general economic volatility, may impact activity in the short term.

PE investors are expected to focus on sectors with strong fundamentals, including healthcare, technology, energy, and infrastructure. While small-cap and mid-cap transactions will likely continue to dominate, improving interest rates may facilitate a moderate increase in large-cap deals.

To request the full CMS European Private Equity Study 2025, visit:

https://cms.law/en/int/publication/cms-european-private-equity-study-2025