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The Hottest Segment For European Buyouts

With its mix of family-led firms, hidden champions and mighty SMEs, the European middle market — firms with roughly €15-€150m in EBITDA — is…

Written by

Zeke Turner

Jason Feder

September 18, 2020

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5 mis

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With its mix of family-led firms, hidden champions and mighty SMEs, the European middle market — firms with roughly €15-€150m in EBITDA — is the continent’s top segment for buyout activity.

But competition is fierce, and not every fund that takes on this segment will come out a winner.

The difference between the annual net returns of first- and third-quartile funds in this space in Western Europe is more than 15 percentage points, according to private equity data provider Cobalt. It’s one reason we at Moonfare take our commitment to only offering top-tier funds to our clients very seriously.

To learn more about the European middle market as a territory for buyout funds, please download our latest specialist article. It takes a macro and firm-level view of the category and offers some analysis of the early impact from Covid-19.

The Hottest Segment For European Buyouts

Key takeaways:

  • There is a deep supply of attractive acquisition targets for buyout firms in the European middle market — but competition among funds has become increasingly fierce, driving up EBITDA multiples paid for targets.
  • Covid-19 began to soften transaction volumes and multiples across the European middle market in the first half of 2020. Now more than ever funds that can differentiate themselves stand to get better prices in acquisitions and thus superior returns.
  • Proprietary sourcing channels and a deep bench of talent to implement a fund’s value creation playbook are critical ways for funds in the middle market to differentiate themselves.

Interested in opportunities to invest in European middle market buyouts funds? please contact our team or complete your profile on Moonfare.com.

‍Important Notice

This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Your capital is at risk.

Authors

Fund Marketing Specialist

Zeke Turner

Senior Legal Counsel

Jason Feder

Sources

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Moonfare does not make investment recommendations and no communication, through this website or otherwise should be construed as a recommendation of any security. Alternative investments in private placements are highly illiquid, speculative, and involve a high degree of risk. Past performance is not indicative of future results. Investors may not get back their money originally invested and those who cannot afford to lose their entire investment should not invest. Prior to investing, carefully consider the respective fund documentation for details about potential risks, charges, and expenses. The value of an investment may go down as well as up. An investment in a private equity ("PE") fund or investment vehicle is not the same as a deposit with a banking institution. Investors receive illiquid and/or restricted membership interests that may be subject to holding period requirements and/or liquidity concerns. Investors who cannot hold an investment for the long term (at least 10 years) should not invest. In the most sensible investment strategy for PE investing, PE should only be part of your overall investment portfolio. The PE portion of your portfolio may include a balanced portfolio of different PE funds. For additional information, including Moonfare's affiliates, please see here.

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Insights
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