European PE deal volume came roaring back in Q3 2020, as dealmakers shifted focus to offence and were selectively aggressive in certain parts of the economy. The re-opening of leveraged lending markets, elevated dry powder levels, and resilience shown in the lower end of the market contributed to the uptick in deal volume. That said, deal activity is still considerably shy of pre-pandemic figures, and we expect a multi-year recovery that will be choppy, uneven, and uncertain, with diverging trends across regions and asset classes due to COVID-19. Exit counts are pacing towards a 10-year low, while fundraising activity gained considerable momentum in the third quarter, putting 2020 on pace for its second-highest capital-raised total in a decade.
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