Despite prevailing headwinds in wider M&A markets, take-private deal flow across EMEA sustained robust levels of activity as dealmakers jumped at opportunities to buy listed companies at attractive valuations
EMEA public-to-private transactions provided a fruitful source of deal flow in 2024, with a combination of lower interest rates and attractive pricing boosting activity levels.
According to Dealogic, take-private deal value in EMEA climbed by close to 10 percent year-on-year to reach US$52.4 billion in 2024. Deal volume showed even stronger annual gains, climbing 26 percent in the same period to reach 54 transactions.
This robust activity made 2024 the third-best year for EMEA take-private value since 2010, and the best ever in terms of volume.
Private equity activity by value 2020 – 2024
Target locations: Central and Eastern Europe and Western Europe Bidder location: Global Sectors: All Sectors
Private equity deal type(s): Exit, Buyout and Secondary Buyout
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Effective July 1, 2023, the underlying Mergermarket data supporting the M&A Explorer was consolidated with Dealogic data to produce an even more complete picture of the M&A marketplace. M&A Explorer commentary published before July 1, 2023 may reference data that does not reflect this consolidation.
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Steady deal flow boosts M&A market
Take-private deal flow has been resilient despite some lingering uncertainty across wider M&A markets, where a persistent difference between bidder and seller expectations has kept hopes of an M&A surge in check.
European M&A deal value did stage a moderate recovery in 2024, but still remained below 2022 levels. Without the uplift from strong public-to-private deal flow, overall M&A value figures would likely have been even further behind the pace of earlier years.
Against a still-mixed backdrop for M&A, public-to-private deal value and volume across Europe have held up well, with buyers noting opportunities to invest in good companies at attractive pricing valuations.
Private equity, which saw an increase in activity in terms of overall volume and value, has driven take-private deal activity, taking advantage of favorable pricing dynamics to accelerate deployment after pausing on new deals through the rising interest rate cycle.
According to S&P and Preqin figures, global PE and venture capital dry powder levels reached US$2.5 trillion in December 2024, putting pressure on managers to put that money to work.
Public-to-private deals have provided an ideal channel to do so, with managers able to deploy large sums of capital into large, high-quality, listed assets.
A consortium led by EQT, for example, took London-listed Irish video game company Keywords Studios private in a US$2.7 billion deal that was one of 13 delisting transactions worth more than US$1 billion involving European companies in 2024. The activity levels highlighted the importance of public-to-private deals as a consistent source of jumbo-ticket opportunities for large cap PE managers eager to put deployment schedules back on track.
Pricing potential
EMEA take-privates have proven particularly attractive for US PE sponsors that have benefited from a stronger dollar but have also noted the gap in valuations between stock markets in the US and Europe.
European equity markets have traded at lower price/earnings multiples for more than ten years, according to Financial Times reports, with the gap widening during 2024, pushing out the discount of the Stoxx Europe 600 to S&P 500 to an all-time high.
These favorable pricing dynamics have spurred US buyers, as seen in the US$5.3 billion deal for London-listed cybersecurity company Darktrace by US-based buyout firm Thoma Bravo.
Thoma Bravo paid a 20 percent premium to the Darktrace closing price prior to the announcement of a deal agreement. Other 2024 public-to-private deals that valued assets at significant premiums to pre-deal stock prices included KKR’s purchase of German renewable energy business Encavis, at a premium in excess of 50 percent; and the Clayton Dubilier & Rice and Permira bid for French cybersecurity business Exclusive Networks, which represented a 34 percent premium to the company’s share price before deal reports first surfaced.
PE firms have clearly seen buying opportunities given the prices at which listed companies have been trading.
Value-creation levers
Although pricing has been a primary driver of public-to-private deal momentum, PE managers have not based investment decisions solely on bargain multiples.
Sponsors have also worked hard to identify assets that may benefit from the longer investment horizons of private market investors, and where sponsors have relevant sector experience and toolboxes to drive earnings growth.
Thoma Bravo, for example, has a large portfolio of US technology assets and deep technology sector expertise, which it will leverage to support Darktrace’s growth in the US market.
For the Keywords Studios deal, meanwhile, EQT has a long-term track record of investing in technology businesses and will support the company’s plans to grow through acquisition and enter new geographies.
Alongside pricing, the ability to add operational value has been a key selection criterion for sponsors, who are focused on deal-specific themes rather than sector overlays. Several public-to-private deals have involved technology-facing assets, but sponsors have been equally comfortable pursuing take-privates across other sectors, spanning financial services, media, industrials, construction and energy.
A promising outlook
Looking ahead, the fundamentals that supported public-to-private deal activity in EMEA in 2024 remain in place. Interest rates in the UK and Europe have settled and are coming down, giving cash-rich private capital bidders the confidence to pursue deals against a more stable pricing backdrop. In addition, the political picture in Europe is now more stable, as the Christian Democratic Union’s general election win at the end of February put an end to months of uncertainty in Germany.
Moreover, equity market caution is expected to continue for some time. This will offer a window of opportunity for buyers to agree and execute deals while target boards will struggle to justify rejecting offers at a premium to the valuations that are likely to persist for the foreseeable future.
Uncertainties do linger, but sponsors with capital to deploy and relevant operational skillsets look set to continue finding solid listed assets that have flown below the radar and can be acquired for good entry multiples.
With solid fundamentals in place, dealmakers will be confident that take-private deals can continue to flourish in the coming year.
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