European PE turns buyer

Overall European deal activities remained strong until the third quarter of 2022 before a drop in the fourth quarter, according to the 2023 edition of the annual CMS Private Equity Study, analysed data from over 100 deals CMS advised on during the year.

With a decline in deal value and a slowdown in exit activities, the review revealed that a significant number of new investments were add-on acquisitions.

The majority of transactions (23%) involved the technology, media and telecoms (TMT) sector, followed by the real estate and construction (18%) and the life sciences (17%) sectors. As an overall market trend, in line with general M&A deals, earn-outs were on the increase, especially when a private equity investor was on the buy-side – a clear sign of the market becoming more buyer-friendly, according to CMS.

While ESG issues continued to be high on the agenda of PE investors last year, the study revealed that ESG is yet to appear specifically as part of the legal due diligence process and in transaction documents.