The European private equity market showed remarkable resilience and adaptability in 2024, despite facing economic volatility and geopolitical uncertainty. According to the latest PwC Private Equity Trend Report 2025, the market saw an increase in both deal value and exit activity, as well as larger transactions and more cross-sector investments. A further acceleration is expected in M&A activity involving private capital in 2025, driven by multiple factors, such as declining capital costs, an increasing supply of deployable funds, the revitalisation of IPO markets, and a narrowing gap between buyers' and sellers' price expectations.

One of the most notable developments of 2024 was the recovery in exit activity, which increased by 13% in volume and 14% in value compared to the previous year. This was a welcome development for the industry, as many limited partners faced liquidity pressures resulting from the slower exit environment of previous years. Sponsor-to-sponsor deals accounted for more than half of European exits, reflecting the strong appetite among private equity firms for quality assets. However, the industry also faced significant fundraising challenges, as general partners prepared for a more difficult capital-raising environment in the months ahead. More than two-fifths of respondents said fundraising will be the biggest challenge for their firm in 2025 and over half said it will be so for the next five years.

Digital technologies in private equity firms and their portfolios are driving improvements in operational efficiency, risk management, and value creation. In 2024, 71% of respondents invested in digital transformation of the business models of their own firm or portfolio companies, with AI being the main focus for 67% of those that invested. The level of digital transformation is important for the future exits of current portfolios and returns, as 83% of respondents said. Moreover, ESG considerations have become deeply embedded in investment processes, with 72% of respondents saying that ESG levers are always a core part of their value creation story when assessing potential new deals. Furthermore, 72% of respondents believe that the returns on ESG investment exceed the cost, suggesting that there is no trade-off between financial and sustainable performance.