Europe-2025 Private Equity Trends: Bigger Deals, Carve-Outs & Sector Consolidation

The Goldman Sachs article identifies that Europe in 2025 is becoming a more favorable environment for private equity due to a combination of macroeconomic and structural trends. Companies are divesting non-core businesses and consolidating within sectors—particularly finance, healthcare, and technology—to focus more sharply on competitive strengths. AI and energy/data infrastructure investments are acting as catalysts for both growth demand and the operational upgrading of enterprises.

At the macro level, cost of capital has declined over the past 24 months in Europe, credit spreads have narrowed, and interest rate pressures are easing. These shifts have made PE deals more financially attractive by improving equity-return profiles and aligning buyer-seller expectations, helping close the valuation gap between European and US targets. In Q3 alone, European deal value was ~€121 billion with about 1,100 deals—slightly down in count from Q2 but more than double the value, underscoring that larger deals are driving growth.

Data from broader industry sources reinforces these observations. Global private equity deal value increased ~19% in H1 2025 compared with H1 2024, reaching ~$386 billion, even though deal count was down ~6%, showing a tilt toward fewer but larger transactions. Carve-outs, where corporates divest non-core assets, are on the rise both globally and in Europe specifically; European carve-outs in first half 2025 valued ~$2.6 billion across ~47 deals vs ~$19.4 billion in the US/Canada over ~83 deals.

Strategically, this environment opens up several implications: PE firms will compete for high-quality carve-outs and platform deals, emphasizing operational strength and value creation post-acquisition. Corporates may face increasing pressure—both from markets and activists—to streamline units. Investors should watch exit channels carefully: IPOs and strategic sales are improving, but if exit timing deteriorates this may undercut returns. Exchange rate movements (stronger euro vs USD) may also affect cross-border interest.

There are open questions. How sustainable is the demand for exits via IPOs or strategic buyers? Will rising multipliers erode the current “European discount”? How will regulatory risks—around taxation, environmental standards, competition law—shape sectors like healthcare, energy infrastructure, and financial services? Also, can PE firms manage operational due diligence at scale given macro uncertainty?