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Strengthening our Industrial Tech & Services team

Investec is pleased to welcome Matthias Odrobina as Managing Director of our European Business Advisory and a senior member of the global sector team covering Europe, UK, Africa, the US and Asia with impartial advice on cross-border transactions.

Matthias brings deep sector expertise across industrial technology (particular focus on smart industries, B2B software and digital transformation).

He has 20 years of experience as a trusted partner to boards and owners on mergers, acquisitions, divestitures, financings, and buyouts, with a particular focus on the industrial sector, B2B software, and business services.

“”

I am thrilled to join Investec as a truly unique platform. What drew me to Investec is a combination of things I deeply care about: a genuine focus on the Mittelstand, a truly entrepreneurial mindset, a strong understanding of industrial convergence – and last but not the least, a team culture that is integrated, collaborative, and just gets things done. I’m looking forward to continuing this mission together: supporting today’s Hidden Champions while helping to build and accompany the next generation on their journey

– Matthias Odrobina, Managing Director
“”

Matthias combines operational leadership, investor insight, and deep M&A expertise in a way few can. Having driven transformation at Voith, led investments at PwC Industrial Tech Holding, and advised clients at AFRY Capital in London, he brings a unique perspective on Industrial Convergence—one of the defining challenges facing our clients today. His sector expertise, transaction experience, and strong focus on the Mittelstand will further strengthen our position across the DACH region.

– Ervin Schellenberg, Managing Partner and Board Member at Investec Advisory Europe

Contact: Matthias Odrobina

Michel Degryck, Managing Partner, has been recognised by MergerLinks by Datasite among the Top Investment Bankers in France!

A well-deserved recognition of his leadership and long-standing commitment to clients.

Behind every successful transaction lies trust, judgement and long-term relationships.

Explore the rankings: Top Investment Bankers in France FY 2025

Our recent sector research has found that growth continues to underpin investor interest in software M&A, however, transaction discussions are increasingly centred on the quality and durability of that growth rather than scale alone.

Recurring revenue models remain attractive, but investors are placing greater emphasis on future-proof business models and the degree to which products are embedded within customer operations. While artificial intelligence is clearly influencing software transactions, valuation outcomes are being shaped by a more balanced assessment of both opportunity and risk.

Advances in software development and AI tooling are lowering barriers to entry, enabling faster feature replication and increasing competitive pressure in certain segments. In addition, compute and model costs can introduce margin volatility and reduce earnings predictability for some business models.

Conversely, companies supported by proprietary datasets and mission-critical workflows continue to demonstrate stronger defensibility. These characteristics enable faster innovation, support broader product offerings, and enhance strategic appeal for both corporate acquirers and private equity investors.

Cross-border demand for Benelux software assets remains strong, with sponsor-backed platforms continuing to drive consolidation across multiple sub-sectors. At the same time, investor selectivity has increased, reinforcing the importance of preparation, positioning, and a clearly articulated equity story.

Please contact Ron Belt, Maurits Odekerken or Jesper de Voijs to access our full M&A Insight Report exploring the key trends, transaction dynamics, and valuation considerations shaping the market.

The European building automation industry is undergoing a period of structural transformation. A traditionally fragmented, owner-managed market is increasingly giving way to a capital-backed platform ecosystem. M&A is no longer merely opportunistic but has become a core strategic tool for vertical integration, scaling expertise, international expansion, and value creation. Leading providers such as Siemens, Johnson Controls, Schneider Electric, and Trane Technologies dominate the market with integrated solutions and digital service portfolios. Mid-sized companies and platform providers such as VDK Groep, Elevion, and Konzmann complement the market with regional strength and specialized technical expertise. Drivers in a market expected to nearly double by 2034 include energy efficiency, regulation, digitalization, AI, and smart building technologies. Private equity is a powerful catalyst for market transformation, driven by buy-and-build strategies, software margin potential, and demand secured by regulation. M&A activity remains high due to fragmentation, technology needs, and international expansion goals.

For owners of private companies, this gives rise to clear strategic priorities: digitalization and cloud/AI technologies should be consistently expanded, service- and lifecycle-oriented business models strengthened, positioning sharpened, and organizational structures made scalable. Sustainability is also emerging as a key competitive and valuation factor.

Digitalization shifts value creation and creates new revenue models

The building automation industry is undergoing a profound transformation that is increasingly shaped by software, data, and services. Even though traditional hardware still plays a role, growth is clearly shifting toward digital solutions. Energy management software, cloud-based BMS, subscription models, and AI-powered optimization systems, in particular, are experiencing high growth rates. Wireless retrofits and cloud-based analytics are also gaining importance and ensuring that recurring revenue accounts for an ever-larger share of total revenue.

At the same time, digitalization significantly improves earnings quality. Digital and data-driven services generate substantially higher margins than the installation business. Providers that combine AI, IoT, and automation consistently achieve above-average EBITDA margins. At the same time, predictive maintenance enables both efficiency gains for customers and the introduction of performance-based compensation models. In addition, service and maintenance contracts have a stabilizing effect on the business model: they smooth out the volatility caused by economic fluctuations in the construction and modernization market. Regulatory frameworks also contribute to investment security and long-term planning.

Consolidation is accelerating

The M&A market in building automation is increasingly characterized by consolidation. The highly fragmented landscape of small and medium-sized providers offers attractive opportunities for strategic buyers seeking, above all, digital expertise—for example, in areas such as cloud architectures, AI technologies, or cybersecurity. These capabilities are becoming essential for remaining competitive and offering integrated, scalable solutions.

Companies with a high proportion of software or proprietary BMS systems also achieve higher EBITDA multiples, as software is not only more scalable but also generates more stable and predictable cash flows. Due to regulatory drivers and the increasing focus on energy efficiency, building automation is considered a particularly resilient industry.

In addition, regional expansion strategies are coming more into focus. North America and Europe remain key markets, but APAC in particular is gaining increasing importance due to high growth rates. Cross-border transactions are on the rise as companies increasingly pursue technological differentiation and geographic scaling in tandem.

Trane Technologies: Expanding digital capabilities through M&A

Trane Technologies provides a striking example of strategically driven investments. With the acquisition of BrainBox AI in 2025, Trane acquired a leading provider of autonomous HVAC optimization based on deep learning. Its technology enables energy savings of up to 25% and CO₂ reductions of up to 40%. The acquisition serves to strengthen Trane’s own digital capabilities and further develop the company’s decarbonization strategy. It also opens up or strengthens vertical markets such as hotels, healthcare, offices, retail, and airports, and unlocks potential for results-oriented service and SaaS models.

Also in 2025, Trane acquired a 49% stake in Kieback & Peter, a European specialist in smart building automation with proprietary hardware and software, service expertise, and a strong presence, particularly in the German market. The investment improves Trane’s access to an established BMS platform such as Qanteon and expands its own HVAC capabilities to include high-quality control and automation systems and lifecycle service business.

Overall, these investments strengthen Trane’s business model on multiple levels: they increase the share of recurring revenue, improve margins through software and AI services, enable extensive up- and cross-selling opportunities, and deepen customer loyalty through long-term service and SaaS contracts.

Private equity as a catalyst for market disruption

Private equity firms are playing a central role in the transformation of the building automation industry. Thanks to attractive market dynamics—including stable annual growth of 8–12%, demand underpinned by regulations, and a high proportion of recurring revenue – the sector is among the preferred investment areas. PE investors are increasingly relying on buy-and-build strategies, in which regional installation and automation companies are consolidated into larger platform groups. The goal is to realize economies of scale, optimize procurement and processes, and expand digital capabilities and software expertise.

The funds’ value creation strategies often include the digitalization of existing business models, the development of proprietary software stacks, and the expansion of the portfolio to include energy management and smart building services. By focusing on predictable cash flows from service and maintenance contracts, PE investors create stable, high-growth platforms.

At the same time, PE-financed platform groups significantly increase the pressure for innovation on traditional market participants. They drive the professionalization of software- and AI-based business models, thereby accelerating the structural transformation of the entire industry.

Success agenda for private business owners

Investec has a senior team in the Technology & Services sectors, who are experienced experts in selling, buying, and financing businesses.

If you have any questions or would like to learn more about building or industrial automation, company valuations, buyer activity, and current market opportunities, please contact us: [email protected],[email protected],  [email protected],  [email protected]

IT-Services multiples have normalized since the 2021 peak (15.9x), with investors now pricing the sector on visibility, profitability and delivery quality rather than pure revenue growth.

Valuations are anchored in the high single- to low double-digit EV/EBITDA range. Premiums accrue to models with higher recurring mix, stronger cash conversion and industry-specific differentiation, while generic capacity-driven models trade at a discount.

European countries with Investec presence on the ground (UK, France, Germany, Benelux, Switzerland, Nordics) account for >85% of Q4 2025 deals, indicating a high overlap between observed M&A activity and Investec’s geographic footprint.

Cross-border share steadily increasing to 57%, Investec present in all main markets

Except for Q2 2025, deal flow further softened in Q4 2025 as buyers became more selective, focusing on assets that demonstrate repeatable execution at scale, governance, high-quality revenue streams and delivery reliability. Cross-border share rose to 57% in Q4 2025, reflecting a clear shift towards pan-regional delivery and regulatory coverage of country specific requirements.

Key drivers behind the cross-border tilt:

Outlook 2026: buyers are re-engaging, but with disciplined optimism – fundamentals and execution certainty remain central to underwriting.

Valuation levels have stabilized, showing slight upward trend in Q4 2025

Convergence continues, as investors apply a uniform KPI lens, rewarding visibility and cash conversion. Valuations in Q4 25 vary between ~9-10x EV/EBITDA with an upward trend. Multiple upgrades require higher recurring mix and margin durability. Providers that productize delivery (templates, automation, near-/offshore leverage) tend to reduce volatility and sustain multiples better through cycles.

YoY EV/EBITDA valuation rebalancing: quality-first buying favours managed models over project-heavy delivery

YoY compression: Valuations declined as investors rotated to quality at tighter entry levels. The strongest pressure appeared in project-heavy models, where wage and bench frictions reduced margin visibility, while operate/managed models saw smaller drawdowns. With buyer discipline still elevated, the YoY reset aligns with the broader post‑2021 normalization in tech services multiples.

2026E revenue growth expected to resume as IT Spend re-accelerates and GenAI scales cloud delivery

2026E marks a rebound from a weak 2025 base. Two main forces drive the upswing:

EBITDA Margins stay resilient, best-in-class performance with key execution levers

Margins have shown only limited compression and remain structurally stable. Key aspects to watch:

Investors reward profitable growth: margins, recurring revenue and cash conversion drive premium multiples

The market rewards profitable growth, not topline alone. Peers that combine solid margin with strong growth cluster at the upper end of sector multiples, while low‑margin growth screens as lower quality. Investors are looking for tight utilization, healthy gross margins and a rising recurring share – in other words, visibility, quality and cash conversion.

The Investec IT-Service Index tracks daily developments. The index includes valuations, growth projections, profitability margins and other metrics. You can find more information on our website.

Investec has a senior sector team in Technology, who are experienced experts in selling, buying, and financing businesses.

If you have questions and would like to know more about valuations, buyer activity and current opportunities in the market – please get in touch:

Ron Belt, Jean-Arthur Dattée, Thomas Ellenberger, Arne Laarveld, Sebastian Lawrence, Mirko Nikkels, Maurits Odekerken, Oliver Reinecker

After two strong quarters, Q3 marked a valuation reset, driven by investor focus on profitability over pure growth. Multiples have converged, rewarding companies that exceed the Rule of 40 benchmark. ERP and HCM illustrate resilience through stickiness and talent-driven demand, while CRM remains the long-term growth leader despite short-term volatility.

For entrepreneurs, balancing growth with margin is now critical to sustain premium valuations, while investors and PE firms should expect continued discipline and position portfolios for a two-speed market. Software remains structurally attractive, but quality – not category hype – will likely lead the way in the near future.

EV/Revenue Development by sub sector: Q3 2019 – Q3 2025

A few takeaways from the last years:

EV/Revenue: YoY comparison 10/2024 – 10/2025

Revenue growth in % by sub sector: 2020 – 2026E

It’s a two-speed market: fast-growing sub sectors (CRM, HCM, A&F) lead the pack, while foundational platforms (ERP, SCM, BPM) show steadier, more cyclical growth.

Software Valuation Framework: The Rule of 40

EBITDA-margin by sub sector: 2020 to 2025 (in %)

Profitability is most resilient in standardised, sticky sub sectors (HCM, A&F, ERP), while CRM, BPM, and SCM face structurally thinner margins due to integration and service intensity.

The Enterprise Software Market by sub sector, 2025-2030

Overall, process- and automation-centric sub sectors (BPM, CRM, ERP) are positioned to capture disproportionate value.

Investec Software Index vs. S&P500

The Investec Software Index tracks daily developments in segments such as ERP, CRM, BPM, SCM, HCM and Accounting&Finance. The index includes valuations, growth projections, profitability margins and other metrics. You can find more information on our website.

Investec has a senior sector team in Technology, who are experienced experts in selling, buying, and financing businesses.

If you have questions and would like to know more about valuations, buyer activity and current opportunities in the market – please get in touch:

Oliver Andrews, Ron Belt, Jean-Arthur Dattée, Thomas Ellenberger, Arne Laarveld, Sebastian Lawrence, Mirko Nikkels, Maurits Odekerken, Oliver Reinecker

Investec Whitepaper

Foreword

At Investec, we have worked with a lot of clients that shaped Enterprise Software. With decades of transaction experience across Business Process Management, Automation, Workflow and adjacent fields, one of our core focuses lies in the layer of the Enterprise Software stack that will be most transformed by autonomy -where orchestration, intelligence, and value creation converge.

Long before agentic AI became a headline term, we saw its foundations being laid by the companies we advised, and it is now that the industry reaches a pivotal moment. This gives us a unique perspective on the future of Enterprise Software, and we are aspiring to leverage this position to support the next generation of software leaders.

Executive Summary

Enterprise Software is on the cusp of its most profound transformation since the shift to the cloud. The next, already strongly emerging wave is agentic AI: systems that reason, plan, and act autonomously. The Autonomous Enterprise is no longer science fiction—it is fast becoming an achievable horizon.

This view is echoed by leading research desks: Goldman Sachs sees agentic AI expanding the software market by over 10%, Morgan Stanley calls it a new value layer redefining SaaS efficiency, and Citi Research envisions an enterprise powered by autonomous agents within CRM, ERP, and BI.

Together, this early but growing body of research reinforces a single conclusion: the next structural evolution in enterprise software will be built around autonomous systems that not only assist humans but execute, learn, and govern within defined business objectives. We take this a step further, identifying that agentic AI requires not a bolt-on integration but a fundamental re-architecture of the enterprise software stack—and we provide evidence that this transformation is already underway.

This is further evidenced by investors already pricing in the disruptive potential of AI-native models, rewarding companies that create the building blocks that enable true autonomy into their core architectures and products.

What is Agentic AI in Enterprise Software

Agentic AI refers to software systems capable of understanding goals, reasoning over context, and autonomously executing tasks across applications and data environments. Unlike predictive or assistive AI, agentic systems combine perception, reasoning, planning, and action in closed feedback loops.

Our thesis: The future of Enterprise Software goes beyond incremental AI add-ons — it is a re-architecting around agents. The winners will master context, orchestration, outcome-based economics, and the governance of autonomous systems. And most importantly the ultimate agentic software delivery to the end user, which is going to be orders of magnitude more complex than delivering just software.

Click here to read the Whitepaper

A day full of inspiration and intensive exchange

On 16 September 2025, Investec Advisory together with FINANCE Think Tank co-organised Dealsourcing 2025 in Frankfurt/Oberursel. With over 1,000 industry experts from M&A, private equity and corporate finance, it is one of the largest events in the German corporate finance community.

Pressure to sell or investment crunch: what is driving financial investors?

In the opening plenary session, Ervin Schellenberg, Managing Partner Investec Advisory together with Matthias Weidner, Head of Business Development DPE Deutsche Private Equity, made a clear statement on the current market situation: “Those who need to sell will sell. Those who still have time will first work on optimising their business.” This quote illustrates the current bifurcation of the market: On the one hand, there are companies that have to sell due to pressure, and on the other, there are companies that are optimising their processes and business models before engaging in transactions.

Holger Truckenbrodt, Partner Investec Advisory said: „Great opportunity to get in contact with new potential business partners that weren’t on my radar screen so far.”

In addition to the plenary session, Investec Advisory organised two well-attended workshops:

Is the next wave of M&A coming in healthcare services?

Matthias Holtmeyer, Managing Partner Investec Advisory, discussed the question of whether the healthcare sector is facing a new phase of consolidation and what opportunities and risks investors can expect. A big thank you to our panelists Martin Spirig, Partner at Invision, Ingmar Wegner, Managing Partner at CONVALES, and Dr Thomas Willaschek, Partner and specialist lawyer for medical law at Luther Rechtsanwaltsgesellschaft.

Modern Food – an M&A niche with great potential

Jürgen Schwarz, Managing Partner Investec Advisory led the session, providing exciting insights into the current M&A trends in the food sector from the perspective of manufacturers and investors. A big thank you to our panelists Carsten Hackel, CFO Germany Nestlé, Andreas Holtschneider, Partner PAI Partners, Godo Röben, Supervisory Board & Advisory Board for Plant-Based Foods, and Fabio Ziemssen, Partner Zintinus.

Both sessions addressed highly topical issues and offered not only exciting insights, but also the opportunity to engage directly with industry leaders.

The focus for Investec Advisory was on exchanging ideas with clients, partners, and new contacts. Many of our conversations showed that personal networks are key to success, particularly during challenging market phases. The event provided an opportunity for us to share our expertise, shed light on key market issues and engage in valuable discussions with partners and clients.

We would like to thank all our panelists, contributors and the Deal Sourcing team for the intensive exchange and look forward to Dealsourcing 2026.

Click below for the Aftermovie:

How a professional dialogue is now moving companies forward

Interview with Thorsten Gladiator, Managing Partner of Investec about how a professional dialogue is now moving companies forward:

This video answers these questions and give you an idea and overview in a few minutes.

Finding the right type of capital and investor to help grow your business

Our team has a long track record of successfully raising equity and debt capital and has the necessary expertise and networks:

We’re pleased to announce a further expansion of our international M&A advisory business with the integration of Capitalmind Switzerland into the Investec brand.

The Swiss team, lead by Markus Decker and Thomas Ellenberger, is proud to join Investec, reinforcing our shared commitment to delivering tailored M&A advice and solutions.

It’s an important milestone for our team and clients, strengthening our presence and capabilities across Europe.

This latest acquisition underscores our commitment to expanding our advisory business, where we now have 300 M&A professionals based across 17 offices globally, and complements the growth of Investec’s integrated offering in Switzerland, which includes private banking, wealth management and direct lending.

“By uniting our M&A professionals accross Europe, we are able to bring fresh ideas and tailored solutions to clients in Switzerland and internationally.”

– Markus Decker, Managing Partner of Swiss office

“This acquisition deepens our Swiss presence and enhances global collaboration, connecting clients to international and local investment opportunities.”

– Jonathan Arrowsmith, Head of Investment Banking, Investec

All our Swiss team members:

Markus Decker, Thomas Ellenberger, Yanik Costa, Dr. Miró Feller, Tim Graber, Kai Kiesinger, Lorenzo Mattei, Luca Stalder and Gabi Korolnyk

Learn more:

Switzerland | Investec Advisory

We at Investec Advisory together with FINANCE Think Tank, are delighted to co-host DEALSOURCING2025 – the leading networking event for the German Corporate Finance community – on 16 September 2025 in Oberursel, near Frankfurt. It is one of the largest events in the German corporate finance community, with over 1,000 participants from the fields of M&A, financing, and restructuring.

Highlights in the opening plenary: “Pressure to sell or Investment crunch: What is Driving Financial Investors?”

Our Managing Partner Ervin Schellenberg and Matthias Weidner, Head of Business Development DPE Deutsche Private Equity will discuss the key question in the opening plenary session.

Workshop 1 at 11:00 am: Is the second M&A wave coming in Healthcare Services?

Matthias Holtmeyer, Managing Partner at Investec Advisory, invites visionaries Martin Spirig, Partner at Invision, Ingmar Wegner, Managing Partner at CONVALES, and Dr Thomas Willaschek, Partner and specialist lawyer for medical law at Luther Rechtsanwaltsgesellschaft, to an expert panel to discuss whether the next wave of M&A activity in healthcare services is coming.

Workshop 2 at 15:30 pm: Modern Food – an M&A niche with great potential

Jürgen Schwarz, Managing Partner at Investec Advisory, invites visionaries Carsten Hackel, CFO Germany at Nestlé, Andreas Holtschneider, Partner at PAI Partners, Godo Röben, Supervisory Board & Advisory Board Member for Plant-Based Foods, and Fabio Ziemßen, Partner at Zintinus, to an expert panel discussion on the question of M&A potential in the modern food sector.

We look forward to a day full of knowledge-sharing, fresh ideas, and new connections.

More on the programme: www.dealsourcing.de

Date: Tuesday, 16 September 2025

Location: Dorint Hotel Frankfurt/Oberursel, Königsteiner Str. 29 61440 Oberursel

In today’s world, too many consultants arrive with a hammer in hand – ready to treat every problem as a nail. But real entrepreneurs don’t need pre-packaged solutions. They have challenges and visions and need solutions properly addressing these challenges and provide options. They need partners who understand complexity, offer relevant expertise, and provide real alternatives – especially when the path forward isn’t obvious.

That’s precisely why I joined Investec.

Not because it’s the biggest or loudest name in the market—but because it relentlessly strives to offer what truly matters:

That’s what drew me here: the chance to help entrepreneurs explore what lies between the classic ‘all in’ or ‘full exit’ choices. The space where creative capital, smart structuring and nuanced advice can unlock new possibilities.

My personal story—how I built and shaped tech markets, what drives me, and why Investec is the right platform for the next chapter – is explored in detail in the article linked below.

But let me leave you with a parable:

A seasoned blacksmith had long relied on one tool—a powerful, time-tested hammer. One day, a young entrepreneur arrived with a broken, intricate machine. The blacksmith hammered, welded, tested—but the machine still stuttered.

“You need more than a hammer,” the entrepreneur said. “You need someone who understands how the system works—end to end.”

The blacksmith began collecting new tools: measuring devices, precision instruments, innovative materials. But the most important tool of all was a compass. It showed where the forces were coming from—and where they needed to go.

He realized success wasn’t about force. It was about using the right tool, at the right moment, with a clear view of the bigger picture.

That’s what we aim to do at Investec.

Click here to read my story in detail.

“Entrepreneurs have challenges and are seeking solutions to mitigate said challenges. Being able to provide client centric advice on adequate solutions to turn challenges into opportunities is at the heart of what we enjoy doing the most at Investec Advisory.”

 

On June 5, we had the pleasure of hosting a selected group of entrepreneurs for our TMT CEO Dinner in our Wiesbaden office.

The evening focused on strategic dialogue around digital transformation and the impact of software and how leaders can actively shape the future of their businesses. A standout moment was the keynote by Lars Lehne (former CEO of Incubeta and Syzygy), who offered inspiring perspectives on South African culture and the intersection of digital expertise, leadership, and openness to change – all with a fresh and thought-provoking angle.

The event wrapped up with a relaxed and personal dinner, offering a space for open dialogue and meaningful new connections.

Evenings like this are where ideas begin to take shape and future plans are set in motion. We’re already looking forward to the next edition!

Investec is proud to announce that our French team is awarded as one of the Best Investment Bank – LBO Small to Mid Cap with a Silver Award at the recent Sommet des Leaders de la Finance in Paris.

Organised by Décideurs Corporate Finance, this event recognises excellence in corporate finance and highlights the work of professionals who lead complex and strategic transactions.

We warmly thank our teams for their dedication, and our clients for their continued trust.

Helen Lucas | UK
Jonathan Harvey | UK

Our 14th report comes at a crucial time for the industry, as GPs get back to the business of selling portfolio companies and raising new funds.

2024 was a tough year for private equity and the overriding view from our survey of 253 general partners (GPs)* is that 2025 will be different.

Our findings show an industry which, despite challenges over the past few years, is resilient, adaptable, and anticipating a more favourable period ahead.

Four in five GPs expect deal valuations to increase in 2025 as interest rates come down, helping to clear exit bottlenecks and accelerate investors’ distributions. The outlook for returns is also brighter, with improvements registered across geographies and fund sizes. Close to two thirds (65%) of investors see returns improving in 2025, up from only 24% in 2024.

Dealmakers still must navigate ongoing geopolitical and macroeconomic risk, as trade tariff tit-for-tats continue and conflicts in the Middle East and Ukraine remain unresolved. It is a complex market, but the backdrop for M&A is better than it was a year ago.

Jump to a section:

Future fundraisings
GP commitments
New world of debt
Innovations and exits
GPs at a crossroads

Future fundraisings

In 2024, 21% of respondents expected a down raise for their next fund: the 2025 research shows only 3% anticipating the same scenario.

There is also a large cohort of super-optimists – 38% expect their next raise will be a blockbuster increase of 25% or more over their previous fund.

Limited partners (LPs), however, are expected to remain highly selective in 2025. In 2024, according to PEI figures1, the ten largest funds to close in 2024 all secured more than $10 billion and absorbed more than a fifth of total fundraising allocations while a Coller Capital LP survey2 showed that the top focus for 98% of investors is that a new manager has a team with a strong track record.

Our survey findings tie in with this theme – close to a third of respondents (31%) expect an increasing number of GPs to move into wind-down. However, this does not mean the opportunity for new managers has passed; just 26% agreed that “very few new GPs will be launched”.

Although fundraising conditions are improving, LPs continue to consolidate GP relationships, focusing on managers of scale and mid-market specialists with differentiated investment strategies and exceptional returns.

Fundraising optimism surges

Jump to a section:

Deal valuations
GP commitments
New world of debt
Innovations and exits
GPs at a crossroads

GP commitments

The survey shows GPs are planning to up their commitment from the typical 2% to 3% to strengthen alignment with investors and boost fundraising momentum.

Managers are taking a blended approach to financing these higher commitments including existing resources, reinvesting carried interest and external debt, which is gaining favour. Most are using two options to fulfil their obligations, with 13% expecting to use three options.

Where are commitments highest?

The findings reveal interesting regional variations when it comes to GP commitments.

UK managers are more likely to be asked for a big commitment: 22% were asked for more than 5% versus just 8% of managers in Europe. Managers in France, meanwhile, seem to be asked for a particularly slim commitment, with more than half expecting to be asked for less than 2%.

Overall, a significant minority of investors expect to up commitments in the future.

Jump to a section:

Deal valuations
Future fundraisings
New world of debt
Innovations and exits
GPs at a crossroads

New world of debt

Debt markets are open for business with a substantial number of new lenders entering the market to provide GPs with enhanced financing optionality.

More than half (54%) of GPs say they will have new lenders to work with in 2024. This marks a shift from last year’s findings, when 56% of respondents saw a contraction in new lender activity. The majority of GPs who took part in our survey are working with credit funds and the top three reasons cited for working with a private credit included higher leverage levels and innovative financing solutions.

UK managers are hopeful that increasing competition will result in looser terms, with 54% of UK managers reporting either private debt narrowing margins or terms loosening generally. Outside of the UK, however, GPs are more cautious, with only 35% forecasting looser terms.

Despite these expectations, lenders are remaining disciplined. Well over a third of respondents (43%) report that leverage multiples have lowered from a year ago.

Competition is fierce for trophy assets in certain sectors, and these companies will be able to negotiate more favourable terms, but lenders will be highly selective.

Interest rates may have come down, but the risk-free rate remains elevated when compared with recent years, making additional leverage costly to service. Debt is available (European leveraged loan issuance climbed by more than 90% in 20243 and private debt managers have $126.4 billion of dry powder available to invest4), but the survey findings on leverage multiples show that capital structures remain relatively conservative.

Covenant flexibility

Even as interest rates have come down, GPs have still had to work hard to protect portfolio companies.

Some 87% of respondents say they have gone to lenders to request covenant flexibility for one or more portfolio companies. Broad economic issues (cited by 41%) and business underperformance (cited by 34%) are the main reasons for requesting flexibility.

Interestingly, close to a third of respondents (30%) have requested covenant flexibility to fund growth as GPs hold some portfolio companies for prolonged periods.

“We will always be open to a conversation about covenant flexibility. If a business is growing and wants to re-lever, or the sponsor wants to hold an asset for longer, loosening covenants can have a positive impact on supporting growth.” – Helen Lucas, Co-Head of UK Origination, Direct Lending, Investec

Lending landscape

As more lenders entered the private equity space, there has also been increased use of some newer debt products. Innovation continues; survey respondents expect ESG-linked lending, fund-level finance and asset-based lending to increase market share.

Around half of the respondents expect credit funds to do more business with their firm during the year, but banks remain highly competitive; almost a quarter (22%) say they expect to place more lending with banks in the next 12 months. Hybrid capital is gaining particular traction for smaller managers with assets of $250m or less, with a quarter of these saying this type of lender will gain the most market share at their firm in the next year.

NAV lending

Net asset value (NAV) finance has proven particularly popular with managers in an environment where liquidity has been constrained.

Four in five GPs said they used NAV finance in the last year, with distributions the most-cited use case (37%).

Uptake of NAV finance looks set to continue accelerating, with two thirds (65%) of respondents who had not used NAV finance previously saying they were interested in taking up NAV loans.

Deployment and operations

Less than half of GPs (49%) have deployed most of their capital in new deals during the past 12 months, with just over a fifth (21%) focusing efforts on smaller bolt-on acquisitions to support buy-and-build portfolios – down from 28% in our previous survey. An increase in the number of GPs deploying most of their capital in equity cures – up to 17% from 11% last year – further highlights the tough backdrop for managers during the past year.

The improving outlook means that the next 12 months should be more favourable for deployment. Somewhat surprisingly, the public-to-private outlook is mixed and not much changed from last year despite low stock market valuations, most notably in the UK5. Some 50% say they expect to look at more public-to-privates but 40% expect to look at less.

Big-ticket take-private deals during 20246 have ensured that P2P remains on the managers’ radars and may result in activity in this area.

“Private equity managers are ready to deploy, but it is taking much longer to originate deals. GPs will be forming relationships with management teams up to three years ahead of a formal process. During the last two years we have seen a number of processes fall over, and it does take time to rebuild before businesses come back to market.” – Kate Gribbon, Head of Financial Sponsor Coverage & Origination, Investec

Jump to a section:

Deal valuations
Future fundraisings
GP commitments
Innovations and exits
GPs at a crossroads

Innovations and exits

One of the single biggest challenges for private equity managers through the rising interest-rate cycle has been to sell portfolio assets at valuations that deliver adequate returns.

In tepid IPO and M&A markets, GPs often opted to sit tight rather than offload assets at lower-than-hoped-for multiples. Hold periods remain above long-term averages, with the backlog of private equity-backed companies sitting at record levels7.

This has had repercussions on fundraising – slowing distributions to LPs have limited their ability to allocate to new funds.

Managers looking at exits will explore all options to crystallise returns, with the survey findings ranking expectations for different exit routes in a narrow band.

More than half of GPs (54%) think trade sales will be the busiest exit route during the next 24 months. But after a long barren spell the IPO is back in the frame again, with the typical manager optimistic that two portfolio companies could be an IPO candidate over the next two years.

The squeeze on other exit routes meant there has been greater use of continuation vehicles which are here to stay as a mainstream exit path: more than 40% of GPs say a continuation fund will be an exit option they are more likely to use in the next 12 months.

The UK IPO question

Private equity-backed portfolio company IPOs haven’t always been crowd-pleasers, particularly on UK markets8, but the survey findings show managers warming to the UK stock market – albeit with some reservations.

Some 65% of UK managers who expect to list a portfolio company in the next two years consider the UK a potential venue – although they will also look at other venues such as Amsterdam or New York.

The size of the manager and portfolio is a factor in stock market selection. Larger managers with bigger assets to float think a UK IPO is less attractive, indicating that larger IPOs are considered more challenging for UK public markets.

Jump to a section:

Deal valuations
Future fundraisings
GP commitments
New world of debt
GPs at a crossroads

GPs at a crossroads

According to Pitchbook figures, GP-to-GP M&A reached record highs at the end of 20249 and the survey points to a long runway of further deals, with 79% of respondents expecting some kind of change to their firm’s structure.

In addition to GP consolidation deals, new teams are forming in spinouts and minority stake investment is proliferating.

Indeed, 38% of GPs say some partners could leave their firm via a spinout in the next 24 months. This is reflective of a tougher fundraising environment, particularly for smaller managers with assets under management (AUM) below $1bn, where spinouts are more likely as junior partners explore other options when fundraisings stall.

Getting ready to capture growth

Historically, the main driver for taking on third-party capital or merging with another firm was likely to unlock liquidity and facilitate succession. While this reason was selected by 22% of respondents, the majority see a transaction as a tool to provide capital for growth or expand service lines and scale.

Ideally, twice as many managers say they would like to be the acquirer rather than target in a consolidation scenario.

What is also worth noting is that when it came to continuation vehicles, our survey showed that 40% of GPs think there will be more single-asset continuation vehicles over the next 24 months and over 25% thought they are likely to become more specialised. Single-asset continuation vehicles allow GPs to remain invested in a prized portfolio company and could potentially lead to a spin-out by a manager.

Jump to a section:

Deal valuations
Future fundraisings
GP commitments
New world of debt
Innovations and exits

* Demographic info

This report is based on 253 responses to an online survey conducted between 7 January and 22 January 2025. Respondents were sourced from a prequalified panel and no PE firm was represented more than once.

178 were based in the UK, 75 in Europe including 22 in Germany, 14 in Spain and 11 in France. Some 34% of respondents were investment directors, other eligible job titles were CFO, VP of finance, director of finance, principal and manager of finance/investments.

Footnotes:

1 https://media.privateequityinternational.com/uploads/2025/01/full-year-2024-fundraising-report-pei.pdf

2 https://www.collercapital.com/41-barometer-winter-2024/

3 https://whcs.law/42eh8Z4

4 https://www.muzinich.com/opinions/corporate-credit-outlook-2025-private-markets

5 https://www.ii.co.uk/analysis-commentary/stockwatch-multiple-reasons-be-bullish-about-uk-stocks-ii533630

6 https://www.ft.com/content/ec9aa2ae-f56a-4373-8c4b-88effc01a25d

7 https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report

8 https://www.theguardian.com/business/nils-pratley-on-finance/2023/jan/19/dr-martens-profits-warning-uk-ipo-market

9 https://pitchbook.com/news/articles/blackrock-hps-purchase-record-year-gp-consolidation

Our French team is recognised as the one of the most active firm in LBOs, M&A and Debt Advisory

We are delighted to announce that our French team has been recognised as one of the most active firm in LBOs, M&A, and Debt Advisory by CF News, a leading French publication in Private Equity and Corporate finance.

The team has achieved the following rankings:

Under Michel Degryck‘s leadership, the French team of 40 cross-sector professionals has continued to deliver results for clients in a challenging environment, delivering tailored and high-quality solutions to entrepreneurs, family businesses, corporates and private equity firms.

“This recognition reflects the trust our clients place in us and the unwavering commitment of our team. We remain dedicated to providing innovative solutions tailored to their strategic challenges.”
— Michel Degryck, Managing Partner, Investec Advisory France

Download the League Tables 2024

Investec announces the appointment of Michael Eriksen as Head of Nordic M&A in support of its strategy to significantly grow its presence in Europe. Michael brings over 25 years’ experience as an M&A advisor to companies in the Nordics.   

In his new role, Michael will focus on identifying and pursuing growth opportunities for clients, in line with Investec’s 25-year track record as a trusted M&A advisor to clients globally, particularly in Europe. Investec provides tailored M&A advice to clients, many of whom operate in the mid-market across a wide range of sectors, helping them achieve their growth objectives.

In 2023 Investec acquired a majority interest in Capitalmind and, with effect from today, completes its transition to the Investec brand.

“Companies across multiple sectors in the Nordics are actively seeking opportunities to expand beyond their borders. Michael’s established relationships and expertise will be invaluable as we enhance our M&A advisory capabilities in the region. At the same time, we are committed to bringing our broader expertise to the Nordics, including leveraged finance and fund solutions for private equity, such as GP financing, continuation funds, and NAV facilities.”

Jan Willem, Managing Partner and Board Director of Investec Continental European Advisory BV (ICEA)

“The Nordic region is a dynamic and expanding market. I firmly believe that Investec, with its strong client focus and comprehensive banking capabilities, is ideally positioned to capitalise on the opportunities that lie ahead.”

Michael Eriksen, Head of Nordic M&A

Read more – Press release

The Digital Agency Landscape:

M&A activity in the digital agency market is on the rise again. In recent years, macroeconomic factors and a focus on integration led to a temporary slowdown. Highly acquisitive platforms shifted their attention to internal alignment, streamlining operations, optimizing synergies, and consolidating previous acquisitions. However, the sector is now experiencing renewed momentum in M&A, fueled by several key market trends:

The Dutch Digital Agency market

The Dutch digital agency market is undergoing rapid consolidation, driven by private equity-backed platforms pursuing aggressive acquisition strategies. With improving macroeconomic conditions and a maturing domestic market, leading firms are increasingly looking beyond national borders for expansion, seeking international opportunities to sustain growth and enhance their global reach.

In our latest platform mapping, Leads.io stood out as the most active acquirer, with at least six acquisitions in the past year. Backed by Egeria, the company continues to strengthen its international footprint, particularly in key European markets such as France and Spain.

Additionally, a new platform emerged as Newport Capital established the European Performance Agency Group by merging four digital agencies – OrangeValley, MvH Media, AdResults, and Increase – into a dedicated performance marketing services group. This aligns with the growing demand for data-driven, results-focused marketing solutions, further driving consolidation in the industry

Market Outlook

The global addressable market for digital advertising agency fees is expected to experience significant growth, with a projected compound annual growth rate (CAGR) of 12.7%, reaching approximately €411 billion by 2026. In Europe, the market is set to expand even faster, with a CAGR of 14.4% from 2023 to 2026, reaching an estimated €44 billion in 2026. This rapid expansion highlights the growing reliance on digital marketing as brands seek to enhance their online presence, optimize performance-driven advertising, and navigate an increasingly complex digital landscape. 

Valuation Insights

Following from our analysis we notice that agencies that position themselves as comprehensive digital service providers tend to receive higher valuations compared to traditional digital agencies. Investors increasingly favour firms that offer end-to-end marketing solutions, encompassing SEO, social media management, content marketing, email marketing, web development, and advanced data analytics. Additionally, agencies with broad service models benefit from diversified revenue streams, stronger cross-selling opportunities, and greater resilience to market fluctuation; all factors that contribute to higher investor confidence and premium valuations.

For more information and our full 2024 Digital Agency Report, which includes the mapping of PE-backed Buy & Build platforms in multiple countries, please contact Ron Belt or Maurits Odekerken.

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