As exits decline and LPs struggle to commit, PE fundraising timelines in Europe have hit a new record for a third consecutive year. A two-year-long fundraise is now more likely to be the norm rather than the exception.
According to PitchBook data, the median time to reach a final close for a European PE fund this year was 20.9 months—almost twice the 12.5 months recorded in 2022.
This has happened against a backdrop where exits have decreased on the continent. Data from PitchBook’s 2026 EMEA Private Capital Outlook report shows that Europe recorded just 1,021 PE-backed exits in 2025—the lowest annual total in a decade and a sharp drop from 1,590 in 2024. Exit value also fell significantly, returning €211.5 billion (about $248 billion), marking the weakest year for capital returned since 2020, when exits totaled €210.2 billion.
As exits stall, liquidity has dried up across the ecosystem. LPs who once relied on regular distributions are now cash-flow negative, slowing their ability to recommit and forcing GPs to remain in the market longer, often juggling multiple closes and overlapping fundraises. The traditional fundraising rhythm has started to break down.
“The macro environment is gloomy: high interest rates, stubborn inflation, muted growth in Europe, and flat growth in the US. This has made it very hard to do deals. Sellers are anchored to 2021 valuations, and buyers aren’t willing to meet them. IPO markets have been closed,” said George Lyons of Asante Capital, a London-based placement agent.
Will Barrett, managing partner at Paris-based fundraising advisory firm Reach Capital, added that the practical result is simply slower dealmaking. “What used to take six months now takes nine,” he said. “If a GP underwrote a 2.5x gross to deliver 2x net, that may now be difficult to achieve. Sellers face a choice: accept 10–30% less than expected and deliver a return, or wait six to 18 months hoping the environment improves.”
The exit drought has led to a severe liquidity squeeze for LPs. Capital calls continue, but distributions have dried up. Some LPs have tapped the secondary market, but most still prefer to rely on natural liquidity before recommitting to the original investment.
“The market isn’t broken—there’s still demand,” Barrett said. “It just takes longer because liquidity is missing. Many European allocators are above their target allocations, which slows re-ups and forces prioritization.”
Rolling into a new normal
One visible consequence of scarce liquidity is the rise of multi-stage fundraises. With fewer LPs committing early, GPs tend to accept capital as it arrives and rely on rolling closes to maintain momentum.
“We’re three years into declines in PE fundraising and M&A volume,” Lyons said. “There’s less capital committed, and LPs want to preserve optionality. If you can wait, you can see whether the manager is able to transact. Transactions aren’t guaranteed in today’s environment—they’re difficult.”
PitchBook data shows that only 117 funds closed in Europe as of Dec. 12—a 10-year low. Of these, 29% had multiple closes, the highest share in a decade.
For LPs arriving at final close, the fund is often partially deployed. They usually have to pay equalization interest—a catch-up fee that compensates earlier investors for investing in the fund sooner, typically at a rate of around 8% a year. However, in practice, this amount is small because funds use subscription credit lines—short-term loans secured against LP commitments—to finance early investments instead of immediately calling LP capital.
“LPs prefer rolling closes because waiting reduces blind-pool risk,” Lyons said.
For GPs, though, rolling closes are a compromise. A single close gives control over terms and lets the team focus on deals. Multiple closes extend the timeline. “If GPs take 12 months to fundraise and don’t do any deals, LPs may not come in at the final close,” Lyons said.
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Andy Lund, managing director at investment bank Houlihan Lokey‘s Capital Solutions Group, said the reliance on rolling closes also reflected the transactional nature of today’s fundraising environment.
“Many funds need to raise capital around deals,” he said. “There are often discounts for first-close participants or access to co-investment, which LPs increasingly want because it blends down their fee and carry.”
As LPs commit, deals trigger further closes, creating a “building-block” process where a fund can be more than 50% invested by the time it reaches its hard cap. In some cases, managers must immediately start fundraising for the next vehicle.
“A simple $1 billion PE fund might take 18 months to raise while also doing several co-investments and at least one continuation fund,” Reach’s Barrett said. “There’s very little time when you’re not selling.”
Show me the DPI
After two years of weak exits, LPs want proof that managers can return capital before committing more. Many GPs that raised significant funds before the pandemic are still holding assets at 2021 valuations, and LPs are hesitant to re-up until those positions are realized. This makes fundraising directly dependent on a recovery in M&A.
Lund noted that 2025 was expected to be “the year of exits,” but geopolitical shocks stalled sale processes. Hopes have now shifted to 2026—though it is likely to be crowded, as GPs who delayed launches re-enter the market. “LPs are insisting: don’t come back until you’ve delivered liquidity,” Lund said.
Attempts to raise before reaching 70–75% invested are being delayed.
Yet there are pockets of optimism. Asante’s Lyons said the market was functioning, with some strong fundraises still taking place. Macro conditions have stabilized, and public markets have begun to reopen, with Q3 marking the strongest IPO quarter since 2021. If M&A activity picks up, the pace of fundraising is expected to increase, narrowing the gap between fast and slow fundraisers.
Ultimately, recovery hinges on exits. A solid year of distributions would restore LP liquidity, reset allocation capacity and ease the cycle of perpetual fundraising. Until then, DPI remains the most important benchmark.
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