European private equity M&A hits three-year low, says LSEG

GSAM bullish on growth equity.

We start the day with a look at some data from LSEG, specifically around private equity M&A for the first nine months of the year. While the overall story shows a big drop in activity, we’re going to weave some of the findings into the rest of the coverage today.

We then hear a positive outlook on European growth equity, as Nina Lindholm speaks to Goldman Sachs Asset Management’s Christian Resch.

Next, we look at the state of play in the IPO market, amid reports that another PE-backed firm has postponed a listing, while L Catterton-backed Birkenstock prices a US listing.

We finish on a couple of take-privates, as deals by Searchlight Capital Partners and GSAM win regulatory approvals.


We’re opening up with a bit of data, as MK Flynn quizzes Matt Toole, director of deals intelligence at LSEG, on his firm’s latest M&A figures.

Toole told MK that “for the first nine months of 2023, European private equity-backed M&A has declined 57 percent compared to last year, marking a three-year low”.

Here’s what Toole had to say about sectors:

PE-backed tech M&A accounted for 29 percent of total PE-backed value at $118.2 billion, down 34 percent from a year ago when PE-backed tech deals totalled $180.1 billion. Financials and healthcare deals rounded out the top three sectors accounting for 15 percent and 12 percent, respectively.

While private equity deals in the materials, consumer products and telecommunications sectors saw double-digit percentage gains compared to a year ago, media and entertainment, real estate and industrials buyouts registered average declines of more than 80 percent compared to 2022 levels.

You can read the full Q&A here.

Growth in growth

In more optimistic news, Goldman Sachs Asset Management expects an uptick in European growth equity with tech buyers holding a large amount of cash, Christian Resch, head of EMEA Growth Equity, told PE Hub Europe’s Nina Lindholm.

GSAM’s own activity in the sector includes a recent exit from LeanIX, an enterprise architecture management software provider, to German software giant SAP.

The European growth equity environment is getting more attractive for financial and strategic investors, said Resch, given sellers have trimmed their valuation expectations “a bit” relative to where they were in 2021 and in the first half of 2022.

“At the same time, strategic buyers, and tech buyers in particular, sit on a very large amount of cash on balance sheets,” he added. “We’re talking about probably north of $700 billion of capacity in the market to do M&A. It’s not unreasonable to expect that part of that will be utilised for M&A transactions.”

Check out the full interview to learn more about the LeanIX exit, including how it came a little earlier than GSAM expected.

No exit?

We’ve written a lot on PE Hub Europe about the difficulties of the exit market this year, making GSAM’s earlier than planned sale of LeanIX a bit of an exception.

This is what LSEG’s Toole had to say on the subject:

With both the IPO and M&A market largely shuttered, PE exits have been quite difficult. Private equity-backed sales are at a three-year low, down 27 percent by value and 17 percent by number of deals compared to a year ago. Within those sales, secondaries account for 18 percent of all PE sales so far this year, down to $44.2 billion, or 23 percent in value from a year ago.

Instead, sponsors “will need to be prepared to hold assets for longer”, as BC Partners chairman of Europe Nikos Stathopoulos told me back in July.

There had been hopes that the IPO market might alleviate a bit of that pressure by reopening, but there haven’t been super strong signs on that front.

While L Catterton-owned German shoemaker Birkenstock priced an IPO on the New York Stock Exchange yesterday at $46 per share, that was only in the middle of its $44-$49 target. We’ll see how it trades when it opens later today.

In a poorer sign for sentiment, German on-the-road payments company DKV Mobility – in which private equity firm CVC has a minority stake – has delayed a planned listing until next year, according to two people familiar with the matter spoken to by Reuters. DKV had not publicly announced its IPO plans.

CVC declined to comment when approached by PE Hub Europe.

That news follows compatriot Renk Group, majority owned by private equity firm Triton, last week postponing its own IPO.

For news of a successful exit, read about Apollo Global Management selling Vacuumschmelze, a magnetic materials and rare earth permanent magnet producer, to Ara Partners in our coverage from yesterday.


Other deals are moving forward in the public-to-private arena – an area that the LSEG data shows has been a bright light this year. From Toole:

One of the selling points for private equity over the years has been the ability to take companies private to allow for operational or strategic decision making to be implemented outside of the glare of the public markets. Take-private deals account for $133.2 billion, which is 33 percent of total PE-backed M&A value for the first nine months of 2023, marking the largest percentage since the same period in 2013.

So let’s take a look at those take-privates that are progressing.

Goldman Sachs Asset Management’s pursuit of Norwegian edutainment company Kahoot, alongside co-investors including General Atlantic, KIRKBI Invest and Glitrafjord, has passed all its regulatory approval conditions as of this morning, according to a statement.

Meanwhile, Searchlight Capital Partners has won approval from the UK’s Financial Conduct Authority for its take-private of alternative asset manager Gresham House. That deal still has a few approvals needed, however.

You can read the details on both the Kahoot and Gresham offers in our coverage from the initial announcements here.