Q1 Barometer: Total European deal value reaches new decade high

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Overall private equity activity (including VC and growth deals) in Q1 set a number of new records: total deal volume (920 deals), total deal value (€92.1bn) and average deal size (€100m) all rose for the third consecutive quarter and were at their highest across the barometer's 10-quarter sample.

It was buyout activity that predominantly fuelled overall PE value. A total of 344 buyouts worth €71.8bn were announced in the first quarter, although volume dipped by 32 deals quarter-on-quarter. A string of big-ticket investments pushed average deal value to €208.8m – up from €157.5m in the previous quarter.

Growth capital deals also witnessed an impressive increase in Q1, following a dip in activity seen in the final quarter of 2020. Deals worth an aggregate total of €18.8bn marked a three-year high for the segment, with the average equity ticket jumping from €25.9m to €42.6m quarter-on-quarter. Performance in the early-stage segment recovered slightly following an underwhelming Q4, increasing by nine deals. Deal value, on the other hand, decreased from the €2bn peak reached in Q4 2020 to €1.5bn.

"With the exception of early-stage venture, the volume and value of European private equity deals are now back at record levels," said Merrick McKay, Aberdeen Standard Investments' head of European private equity. "Unsurprisingly, the high demand for assets (including competition from new sources of capital) is driving prices for quality assets ever-higher. To a large extent, the implicit pressure to deploy record levels of dry powder is influencing investment behaviour. Nevertheless, private equity confidence is enhanced by the apparent robustness of most manager's portfolios, and the pricing being achieved on increasing levels of exit activity."

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