Your expert for questions
Dr. Ralf U. Braunagel
Partner, Private Equity Leader at PwC Germany
Tel: +49 160 7420539
Email
Fewer deals, but significantly larger transaction volume
The European private equity (PE) market presented a divided picture in 2025: the number of deals fell by eight per cent year-on-year to 3,881 deals, while transaction volume surged by a full 28 per cent to €457.6 billion. Megadeals – transactions above the one-billion-euro threshold – were a particular driver: their number rose by 34 per cent to 71 deals.
By contrast, the mid-market remained subdued. In addition, uninvested capital – dry powder – stood at €434.8 billion, close to its all-time high. At the same time, PE firms increasingly need to generate returns operationally: average purchase prices stand at 12.8x operating earnings, while leverage ratios have fallen to a moderate 50 per cent.
These are some of the key findings of the Private Equity Trend Report 2026 by PwC. For the analysis, PwC surveyed a total of 250 partners and managing directors of European PE firms in the first quarter of 2026. Each managed more than €250 million in assets.
“Falling interest rates, the execution of pent-up transactions and the convergence of price expectations between buyers and sellers are supporting the market. But the recovery is unevenly distributed: large funds with operational expertise are attracting capital, while the mid-cap segment is waiting for more realistic valuations.”
The study at a glance
DACH region: Volume grows by 69 per cent
The DACH region – Germany, Austria and Switzerland – saw a total of 557 PE deals in 2025. While this was three per cent fewer than the previous year, volume surged by a full 69 per cent – to €88.3 billion. Buyouts followed the same pattern: eight per cent fewer transactions (430 deals), but 56 per cent more volume (€60.9 billion). Sales from existing portfolios also recovered: 168 exits generated a total of €51.5 billion.
Three fields offer attractive opportunities for private equity in Germany
Despite two years of contracting economic output, Germany underwent a political realignment: the CDU/CSU–SPD coalition formed in May 2025 improved the investment environment with a €500 billion infrastructure and defence fund, the reintroduction of declining-balance depreciation, and planned corporate tax cuts.
66 per cent of surveyed PE investors held investments in Germany in 2025 during the observation period (2024: 58 per cent). Of these, 97 per cent planned follow-on investments over the next five years, and 56 per cent intended to increase their allocation. Notably, Germany is a market for experienced investors – 95 per cent of firms without German exposure planned no entry.
The current Private Equity Trend Report identifies three investment fields with particularly attractive opportunities. First, corporate carve-outs – exemplified by the €7.7 billion acquisition of BASF’s coatings division by Carlyle and the Qatar Investment Authority. Second, SME succession: according to KfW (Kreditanstalt für Wiederaufbau), around 560,000 German SMEs face an ownership transition by 2027, and according to the IfM Bonn (Institut für Mittelstandsforschung), around 30 per cent cannot find an internal successor. Third, green industrial transformation: the energy transition, grid infrastructure expansion, hydrogen and industrial electrification require large amounts of capital.
TMT sector remains at the top
The most important PE activity sector in 2025 was, as in the previous year, technology, media and telecommunications (TMT): 34 per cent of deals and 26 per cent of total volume fell within this sector. Within the TMT sector, a differentiated picture emerges: enterprise software with integrated AI capabilities commanded premium valuations, cybersecurity attracted competitive bidding, and digital infrastructure – data centres, fibre-optic networks, cloud connectivity – drew primarily infrastructure-oriented capital.
View full study
Private Equity Trend Report 2026
Buyouts and exits 2025, outlook for 2026
The largest buyouts in 2025
The largest buyout with PE involvement in 2025 was the acquisition of BASF’s coatings division by Carlyle and the Qatar Investment Authority at a deal value of €7.7 billion. In second place was CapVest’s acquisition of Stada Arzneimittel (€7.0 billion). Third was the sale of the MasOrange stake by Cinven, KKR and Providence to Orange (€4.25 billion).
Exits: Volume rises, liquidity squeeze persists
Portfolio sales (exits) increased by 49 per cent year-on-year in 2025 to €272.2 billion in volume, while their number rose by seven per cent to 1,192. Three factors drove the recovery: the convergence of price expectations between buyers and sellers, the maturation of the secondary market (record volume: US$240 billion), and isolated IPOs such as Verisure (€3.2 billion, Stockholm) and Shawbrook Bank (£2 billion, London). Nevertheless, average holding periods have risen to 6.5 years, and investors have been net contributors to the asset class for four years.
Outlook 2026: Cautious optimism
43 per cent of surveyed PE firms intend to increase their new investments in 2026, while 47 per cent plan to maintain the 2025 level. 60 per cent expect an improved deal environment in Europe.
However, macroeconomic expectations remain subdued: 71 per cent anticipate little or no growth. Fundraising fell to a ten-year low of €80.9 billion. And distributions to investors remain at 14 per cent of portfolio value – the lowest level since the 2008/09 financial crisis, for the fourth consecutive year.
Further study findings at a glance
- Digitalisation and AI
- Full ESG adoption
- Geopolitics drives deals
- Intensified competition
Digitalisation and AI
88 per cent of PE firms invested in digital transformation in 2025; 94 per cent plan investments for 2026 – a marked increase (planned investment 2024: 72 per cent). For the first time, digitalisation/AI ranks as the most important return driver (36 per cent), ahead of leverage (32 per cent).
83 per cent plan to deploy data analytics and generative AI in due diligence in 2026 (planned 2024: 65 per cent). Data analytics remains the most important investment area at 72 per cent, followed by AI (69 per cent).
Most firms, however, still deploy AI as a point solution. The biggest hurdles are data quality, the skills shortage and compliance with the EU AI Act.
Full ESG adoption
100 per cent of surveyed firms now have an ESG policy – up from 96 per cent the previous year. 80 per cent systematically integrate sustainability factors into investment decisions, compared with 72 per cent the year before. And 76 per cent set ESG-specific KPIs for their portfolio companies and monitor them regularly.
Europe and the US are diverging here: in the US, political pressure is pushing asset managers to withdraw from climate-related alliances, while in Europe, ESG integration is enshrined in law.
Geopolitics drives deals
55 per cent of respondents report that geopolitical disruption, protectionism and trade uncertainty actually increased investment activity in 2025 – through corporate carve-outs, China+1 strategies and succession arrangements. At the same time, 50 per cent expect significantly rising financing costs due to geopolitically driven risk premiums. Indicator: the World Uncertainty Index reached a new all-time high in early 2026, surpassing the peaks during the 2008 financial crisis and the 2020 COVID-19 pandemic.
Intensified competition
67 per cent of respondents report increased competition for investments compared with 2024; 29 per cent describe a significant increase. In the large-cap segment, auction processes are becoming increasingly competitive; in the mid-market, larger funds are pushing into smaller segments; and sovereign wealth funds and family offices are competing with patient, low-leverage capital. Sector specialisation and a proven ability to drive operational transformation are the key differentiators.
“The days when cheap financing and rising valuations alone delivered strong returns are over. Today, the ability to transform portfolio companies operationally and digitally determines success or failure.”
Dr Ralf U. Braunagel,Partner, Private Equity Leader at PwC GermanyDownload the study
Private Equity Trend Report 2026
Do you have any questions?
Contact our experts
Follow us
Contact us
