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Q3 Barometer: European PE's strongest third quarter

Unquote and Aberdeen Standard Investments
29 November 2018

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Despite undergoing its normal seasonal lull in Q3 2018, the European market had its best Q3 dealflow on record with 517 buyout, expansion and early-stage transactions, according to the latest Unquote Private Equity Barometer, published in association with Aberdeen Standard Investments.

Total European PE deal value – counting enterprise value for buyouts and capital invested for expansion and early-stage – was €46.7bn in the third quarter of the year. While the value was not a record, it was the highest Q3 figure for 10 years.

Compared with the previous quarter, both volume and value were down by amounts that are fairly usual for the time of year. Volume was down 13% and value 28%, both the lowest since Q4 2017. It is also worth noting that Q2 was an all-time record for deal volume, so it is no surprise it fell back in Q3.

The trends were mostly driven by buyouts, which achieved a record Q3 volume with 243 transactions. They had a combined value of €41.1bn, the largest Q3 deal value since 2007. Boosting the buyout market was a sharp increase in small-cap (<€100m) deals, which had a record quarter in terms of both volume and value.

Large-caps (>€1bn) continued a decent run of form with 12 deals completed in Q3. This follows 12 in Q1 and 15 in Q2. Prior to Q1 2018, there has only been one quarter since the financial crisis with 10 or more large-cap deals.

Transaction volume and value both declined in the growth capital space in what was a moderate quarter overall. There were 203 investments worth €4.7bn in Q3, down from 247 investments worth €5.2bn in the previous quarter. Meanwhile, the amount of capital invested in early-stage transactions rose despite a decrease in the number of deals. There were 71 deals in Q3, down from 83 the previous quarter. However, the amount invested rose 3% to €948m and is getting closer to breaking the €1bn mark for the first time.

Click here to download the full report, including detailed commentary and statistics for the growth capital and venture capital markets, as well as regional breakdowns.