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Italian PE deal count has returned to growth for the first time since mid-2024, but declining deal sizes still indicate investor caution.
According to PitchBook’s Q3 2025 Italy Market Snapshot, 149 deals closed in Q3, a near 13% rise from the previous quarter and the first increase since Q3 2024. Total deal value, however, stands at €7.4 billion (about $8.5 billion), a decline from €9.3 billion in Q2 and well below the €13.3 billion logged in the same quarter a year earlier.
This apparent disconnect between rising deal counts and shrinking total value reflects a strategic shift rather than a slowdown in activity. Sponsors are pursuing more deals, but at smaller sizes.
According to PitchBook data, buyout and LBO activity totaled €3.8 billion in Q3 2025, down 40% from Q2 and nearly 60% below the same period in 2024, when large-cap buyouts boosted total deal value.
Meanwhile, add-on transactions rose to €3.3 billion, up from €2.6 billion in Q2, marking their strongest quarterly performance since the first quarter of 2024. Add-ons and growth/expansion rounds together represented roughly 50% of total deal value in Q3, compared to less than 30% a year earlier.
Several factors underpin this trend. Financing conditions remain tight, leading sponsors to prefer mid-market and family-owned targets that need less leverage and are easier to integrate into existing platforms.
The growth of private credit—used in almost 30% of Italian PE financings in 2025—has also made smaller transactions more feasible and faster to execute.
The economic outlook shows a fragile yet stable Italian economy, which also urges caution from investors. GDP remained flat quarter-over-quarter, and industrial output declined as exports to non-EU markets weakened amid renewed trade tensions.
The trend in the Italian PE market also sharply contrasts with wider European PE dealmaking activity, which continued to slow down in Q3. Across Europe, the total number of deals fell to 1,546 transactions, nearly 13% less than the previous quarter and the lowest since mid-2020. Quarterly deal volumes have steadily decreased since peaking at 2,300 deals in early 2022.
Italy’s Q3 2025 exit data mirror the dealmaking trend—more activity, smaller values. The country recorded 24 PE-backed exits worth €4.2 billion, up slightly from €4 billion in Q2 but still well below the €9.4 billion seen a year earlier.
Corporate acquisitions generated €2.6 billion, around 60% of the total, while buyout exits contributed €1.6 billion, and no IPOs were recorded, highlighting the emphasis on mid-market trade sales.
With IPO and secondary markets still subdued, sponsors are exiting through targeted disposals and reinvesting proceeds into add-on and growth deals.
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