Following four years of solid economic recovery in the European private equity deal-making environment, PE firms appear to be taking a major step back. According to PitchBook's upcoming 2Q 2014 European PE Breakdown, 1Q 2014 marked the third consecutive quarterly decline in European PE deal count. €37 billion was invested across 532 transactions in the first quarter, a noticeable decline from 595 deals in 4Q 2013 and 802 in 2Q 2013. The decline in deal flow in recent quarters coincides with a decline in exit counts. The first quarter recorded 136 liquidity events and €17.1 billion of capital exited; both figures were down substantially from 4Q 2013 (€27 billion across 163 exits) and represented a 36% quarterly fall in terms of exit counts.
Why the decline? Despite the ongoing recovery in Europe, investors are no doubt concerned by the lack of major progress in resolving budget deficits and generating economic growth, both of which are crucial for PE investments to succeed in the long run. That's especially true in hard-hit countries like Spain, Portugal, Italy, Greece and France, the latter of which is on pace to see its 2014 deal flow cut in half from its 2011 levels.
To be released Wednesday, May 28th, the 2Q 2014 European PE Breakdown surveys recent private equity, venture capital and growth investment activity, as well as exits and fundraising numbers and a regional breakdown. For a longer preview of the report, click here.