Q4 Barometer: deal count remains steady amid tough environment

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The total deal tally was down by 2% to 547 transactions – far below levels during the first months of the Covid pandemic. This suggests there may be little room for further declines. At the same time, value fell further to EUR 50bn, a quarter-on-quarter decline of 22% and a low not seen since the pandemic's initial impact in Q2 2020.

Larger buyout activity was particularly weak, succumbing to sclerotic public debt markets and this weighed on the overall PE market performance. The aggregate value of the buyout strategy as a whole came to just EUR 36.9bn, a decline of 28% on the previous quarter, making it the most evident weak point on a quarter-to-quarter basis. Meanwhile, buyout volume also fell but by a far less pronounced 10% to 207 deals.

Growth capital bucked the trend in Q4, running up by 7% across both volume and value, with 321 transactions worth a total of EUR 12.6bn. This makes the expansion strategy the most resilient area of the European PE market in the most recent quarter and will be an area to watch over the coming months.

"All asset classes had a fraught year in 2022, as high inflation and rising rates rattled investor confidence. Private equity did not escape this," Alistair Watson, the head of strategy innovation at abrdn private equity, wrote in the report. "However, the final three months of the year showed promising signs that Europe’s PE market may be nearing, or has even already reached, its nadir."

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