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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

ContentsKey takeaways 3

Overview 4

European PE metrics trend larger 5

Multiples see continued expansion 6

Spotlight: Cross-border deal flow 7

Deals by sector & size 8

Exits 9

Secondary buyouts buoy exit activity 10

Fundraising 11

Mid-market funds increasingly popular 11

¤363.0B ¤150.2B ¤67.3Bdeal value across 3,015 transactions

• 2017 was another strong year for European

PE. Deal flow totaled ¤363.0 billion across

3,015 transactions—the second-highest year

on record in terms of value.

• PE investors headquartered outside of

Europe were involved in 718 deals totaling

¤150.2 billion in value—another tally that

resulted in the second-highest year on

record in terms of value.

Key takeaways from the analyst

Dylan Cox, Analyst II

7% YoY

deal value with non-European PE investors

involved

raised across 109 vehicles

• European PE firms raised ¤67.3 billion

across 109 vehicles in 2017, a 7% decrease

from the prior year in terms of value, but

still the second-highest capital total since

the financial crisis. After growing every year

from 2012 to 2016, the median fund size

dipped slightly in 2017 to ¤310.0 million—still

comfortably above pre-crisis levels.

• Secondary buyouts accounted for one half

of all exit activity. PE firms invested ¤88.1

billion in transactions in which another PE

firm was the seller in 2017—higher than any

other year on record. Meanwhile, strategic

acquisitions accounted for just 44% of exit

activity, the lowest proportion in the last

decade.

Credits & Contact

PitchBook Data, Inc.

John Gabbert Founder, CEOAdley Bowden Vice President, Market Development & Analysis

Content

Dylan E. Cox Analyst IIMasaun Nelson Data Analyst

Design

Caroline Suttie Production

Assistant

Eric Maloney Graphic Designer

Contact PitchBook

pitchbook.com

Research reports@pitchbook.com

Click here for PitchBook’s report methodologies

PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN3

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

European PE metrics trend larger2017 was another strong year for

European PE. Deal flow on the

continent totaled ¤363.0 billion

across 3,015 transactions—a

14% increase and 11% decrease,

respectively, from the prior year.

Activity mirrored trends across

private markets, with investors

completing fewer but larger deals

in 2017. The median deal size for

European PE transactions increased

by 67% in 2017, to ¤38.5 million—the

highest since 2006. Larger deal

sizes are driven by a confluence of

factors, one being the need to write

larger equity checks to effectively

allocate the larger funds raised

in recent years, as evidenced by

the ¤125 billion in dry powder in

European funds (as of June 30, 2017).

An improving economy has also

provided tailwinds to PE dealmaking.

In 2017, European GDP is expected to

have grown at 2.2=5%, its fastest rate

in a decade.

€167

€188

€183

€208

€285

€396

€317

€363

2,298

2,6662,499 2,613

3,043

3,449 3,3863,015

2010 2011 2012 2013 2014 2015 2016 2017

Deal Value (€B) Es�mated Deal Value (€B)

# of Deals Closed

Es�mated # of Deals Closed

Aggregate deal value & volume diverge

European PE activity

Source: PitchBook

4

Overview

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Increasing debt boosts multiplesEuropean M&A multiples continued

to creep higher in 2017. The median

valuation (including buyouts and

strategic acquisitions) reached 7.6x

EBITDA by year-end, nearly three

turns higher than the recent low

of 4.8x recorded in 2010. Prices

continue to receive upward pressure

from an increase in debt usage,

which reached a median of 4.0x

EBITDA in 2017—the highest in

three years. Historically, European

dealmakers have relied heavily on

banks for buyout financing, but

that trend has begun to change.

Private debt funds now provide

an alternative source of capital for

buyout transactions. However, these

funds should not be mistaken as the

primary driver of the recent uptick

in private debt usage. Debt/EBITDA

levels reached these levels prior to

the advent of these funds.

€23.0

€38.5

€0

€5

€10

€15

€20

€25

€30

€35

€40

€45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Median deal size spikes upward

European PE median deal size (¤M) by year

Source: PitchBook

3.3x

2.8x

2.7x

2.2x 2.

8x 3.1x

3.2x 4.

0x

3.7x

3.6x 4.

0x

2.0x

2.6x

2.7x

2.6x

3.0x 3.

1x

2.5x

3.0x

3.5x

3.9x 3.

5x

5.3x 5.4x 5.3x4.8x

5.8x 6.2x5.7x

7.0x 7.2x 7.4x 7.6x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Debt/EBITDA Equity/EBITDA

Valua�on/EBITDA

Source: PitchBook

Multiples see continued expansion

European M&A (including buyouts) multiples by year

5

OVERVIEW

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Bolt-on plateau continuesAfter growing from 29% of all buyouts

in 2006 to 50% of activity in 2011, the

proportion of bolt-on transactions has

plateaued in recent years. As buyout

firms expanded their portfolios over

the last decade, they increasingly

engaged in buy-and-build strategies

to enhance the operations of their

portfolio companies, blurring the

traditional demarcation between

strategic acquirer and financial

sponsor. However, buy-and-build

strategies hit a high-water mark in

Europe far before they did in the US.

Bolt-ons still account for one of every

two buyouts in Europe, compared

to two of every three in the US. The

reasons for the difference are clear,

with perhaps the primary factor being

the relative ease of doing business

across state borders rather than

national ones. Despite the single

market of the European Union, cross-

border bolt-on transactions within

the continent still carry more tax and

legal implications, as well as cultural

barriers, relative to deals across US

states.

451 79

6

700

494 75

9 1,04

7

940

986

1,14

8

1,33

0

1,31

2

1,14

7

1,12

0

1,37

0

1,08

3

662

919

1,03

1

911 97

8

1,18

5 1,29

9

1,29

4

1,11

6

29%

37%39%

43%45%

50% 51% 50% 49%51% 50% 51%

Bolt-On Non Bolt-On Bolt-On % of Buyout

Source: PitchBook

One-half of European buyouts are bolt-on transactions

European bolt-on activity by year

0

100

200

300

400

500

600

700

800

900

1,000

€0

€20

€40

€60

€80

€100

€120

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2013 2014 2015 2016 2017

Deal Value (€B) Es�mated Deal Value (€B) # of Deals Closed Es�mated # of Deals Closed

Quarterly figures indicate tapering in deal count

European PE activity

Source: PitchBook

6 PITCHBOOK 2017 ANNUAL EUROPEAN VENTURE REPORT

OVERVIEW

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Spotlight: Cross-border deal flowEuropean companies continue

to garner interest from overseas

investors. PE investors headquartered

outside of Europe were involved

in 718 deals totaling just over ¤150

billion in value—the second-highest

year on record in terms of value. A

steadily improving macroeconomic

backdrop has been attracting

investors to the continent. As a result,

deals with at least one non-European

investor accounted for 25% of all

transactions in 2017, compared to just

22% in the prior year.

There are a multitude of possibilities

for the increased interest from

outside PE firms. First, acquisitions

are an efficient way for companies,

including PE-backed ones, to expand

their global footprint. Second,

large US PE firms, which long ago

established operations in Europe,

are now deploying larger funds

on the continent. For example,

Carlyle, Bain, KKR and The Riverside

Company are actively investing out

of funds that are their fourth or fifth

European buyout iterations. This

trend is indicative of the growing heft

of these firms, which have not only

expanded geographic scope and

AUM, but also launched new strategy

offerings in recent years.

Outside capital still flocking to the continentEuropean PE deal flow with non-European investors

Source: PitchBook

€126

€122

€85

€28

€62

€56

€65

€72

€118

€164

€122

€150

438

587

500

309

430

496

497535

704765 751

718

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Deal Value (€B) # of Deals Closed

7

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Deals by sector & size

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010

2011

2012

2013

2014

2015

2016

2017

B2B B2CEnergy Financial ServicesHealthcare ITMaterials & Resources

€0

€50

€100

€150

€200

€250

€300

€350

€400

€450

2010

2011

2012

2013

2014

2015

2016

2017

B2B

B2C

Energy

Financial Services

Healthcare

IT

Materials & Resources

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010

2011

2012

2013

2014

2015

2016

2017

€2.5B+ €1B-€2.5B €500M-€1B

€100M-€500M €25M-€100M Under €25M

Fewer deals completed under ¤25M

European PE deals (#) by size

IT dealmaking remains most resilient

European PE deals (#) by sector

Technology multiples lead to growth in deal value

European PE deals (¤B) by sector

€0

€50

€100

€150

€200

€250

€300

€350

€400

€450

2010

2011

2012

2013

2014

2015

2016

2017

€2.5B+ €1B-€2.5B

€500M-€1B €100M-€500M

€25M-€100M Under €25M

Larger deals surge by proportion of value

European PE deals (¤B) by size

8

Source: PitchBook Source: PitchBook

Source: PitchBook Source: PitchBook

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Exits

Source: PitchBook

In 2017, PE firms enjoyed another

strong year of exit activity. PE-

backed exit activity totaled ¤175.0

billion in value across 1,094 portfolio

companies—the fourth consecutive

year of at least ¤160 billion. Strong

liquidity was aided by the buying

power of other PE firms eager to

deploy the sums of dry powder raised

in recent years. Secondary buyouts

(SBOs) accounted for one half of all

exit activity in 2017, both in terms

Secondary buyouts buoy exit activity

€152

€76

€21 €6

1

€111

€81

€111

€166

€191

€161

€175

977

689

501

716

940

845

1,0501,146

1,369

1,229

1,094

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Exit Value (€B) # of Exits

European PE exits by year

Source: PitchBook

of number and value of transaction.

PE firms invested ¤88.1 billion on

transactions in which another PE firm

was the seller—higher than any other

year on record. Meanwhile, strategic

acquisitions accounted for just 44%

of exit activity, the lowest in the last

decade. Corporate acquirers slowed

their pace of acquisition last year, as

they worked to incorporate recent

purchases into existing operations.

PE firms enjoy fourth consecutive year of strong exit value

Though the broader European IPO

market bounced back in 2017, PE-

backed IPOs were essentially on

par with the prior year. PE-backed

companies raised ¤14.5 billion across

63 listings in 2017, a 7% decrease and

5% increase, respectively, from 2016.

New listings were still well below 2014

and 2015, which saw record levels of

PE-backed IPOs.

9 PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

€0

€50

€100

€150

€200

€250

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate Acquisi�on IPO Secondary Buyout

0

200

400

600

800

1,000

1,200

1,400

1,600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate Acquisi�on IPO Secondary Buyout

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2012 2013 2014 2015 2016 2017

UK & Ireland

Southern Europe

Nordic Region

DACH

France/Benelux

Central & EasternEurope

UK & Ireland account for plurality of exit activity in 2017

SBOs account for one half of exit value

European PE exits (¤B) by type by year

Corporate acquisitions account for fewer PE exits than in any year since 2012

European PE exits (#) by type by year

Source: PitchBook Source: PitchBook

Source: PitchBook

European PE exits (#) by region by year

10

EXITS

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PITCHBOOK 2017 ANNUAL EUROPEAN PE BREAKDOWN

Fundraising

European PE firms raised ¤67.3 billion

across 109 vehicles in 2017, a 7%

decrease from the prior year in terms

of value, but still the second-highest

capital total since the financial

crisis. Institutional investors who are

starved for yield in more traditional

asset classes continue to propel

allocations to alternatives, including

PE and private debt. ¤5.3 billion was

committed to energy funds in 2017,

the highest of any year on record.

Growth funds, too, saw ¤4.9 billion in

capital commitments, higher than any

year since 2013.

After growing every year from 2012

to 2016, the median fund size dipped

slightly in 2017 to ¤310.0 million—

below the ¤326.4 million recorded

in 2016, but still comfortably above

pre-crisis levels. The decrease in

fund sizes is indicative of a growing

interest in middle-market-focused

funds (those with between ¤100

million and ¤1 billion in commitments),

which accounted for 77% of total

closes on the year—the highest in at

least a decade. Interest in the middle

market, however, has not stopped

the largest firms from raising mega-

funds. In June, CVC Capital Partners

raised the largest European buyout

fund in history, totaling ¤16 billion for

its seventh flagship fund.

Mid-market funds increasingly popular€7

7

€82

€50

€41

€23

€39

€32

€57

€48

€51

€72

€67

201 200

171

128

116

132

119

123

121

92

105 109

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Capital Raised (€B) # of Funds Closed

€312

€310

€0

€50

€100

€150

€200

€250

€300

€350

€400

€450

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Buyout Funds All PE Funds

Capital commitments total second highest since financial crisis

European PE fundraising by year

Fund sizes dip amid increasing interest in mid-market funds

Median European PE fund size (¤M) by year

Source: PitchBook

Source: PitchBook

11

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