Narrowing valuation gap, LP pressure lift EU, UK private equity exits

Private equity exits in the European Union and the UK increased in 2025, with volumes rising 3.6% year over year to 836 in the EU and 11.3% to 305 in the UK, according to S&P Global Market Intelligence data.

"There's this backlog of assets from a lack of activity going back to 2022, 2023. What we saw in 2025 is some of that backlog is starting to exit," said Ben Pott, a partner specializing in the private equity sector at advisory firm PKF Littlejohn LLP.

For the past three years, a valuation gap between buyers and sellers stalled exits. The gap has started to narrow as limited partners pressure general partners to compromise on valuation expectations, Pott said.

Trade sales to corporate buyers remain the preferred path for private equity exits in the UK and the EU. In 2025, the UK recorded 240 trade sale exits, while the EU saw 584.

Initial public offerings continue to be unattractive in both the UK and the EU, with public valuations trading at a discount to private markets, said Daniel Baade, CEO of M&A advisory firm Dyer Baade & Co. Ltd.

Secondaries that are done through continuation vehicles, which offer existing investors the choice to cash out or roll over into a new fund, are gaining ground in both the UK and the EU. Exits through secondary transactions reached 63 in the UK and 249 in the EU in 2025.

When a clean exit is difficult, more flexible deal structures such as continuation funds, earnouts — which obligate the buyer to pay the seller when the asset reaches certain milestones — and partial exits are increasingly used to bridge valuation disagreements and create liquidity, Pott said.

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Top sectors

The technology, media and telecommunications sector had the most divestitures in 2025, with 258 in the EU and 91 in the UK. Industrials and consumer were the second- and third-largest sectors for exits in both markets.

TMT, industrials and consumer are attractive because they are "AI safer," meaning AI is more likely to increase demand for services in these sectors than to displace them, said Baade.

The largest completed exit in the EU was in the industrial sector: the $7.82 billion sale of energy billing services company Techem GmbH. In the UK, the consumer sector saw the largest completed exit: Greenoaks Capital Partners LLC and Dst Managers V Ltd's exit from food delivery app Deliveroo PLC in a sale to its competitor DoorDash Inc.

Outlook

Exits in the EU and the UK could increase in 2026 due to interest from US buyers, particularly in the technology, healthcare and life sciences sectors, where multiples often lag behind US counterparts, said Pott.

Renewables, energy storage and wider energy infrastructure could also see interest from buyers, Pott said, noting that the ESG conversation in Europe has evolved to encompass energy resilience and security.

On the other hand, exits for software as a service (SaaS) companies may be difficult in 2026 and 2027, he said.

"Given the surge in SaaS acquisitions in 2020/21, we're now approaching five-year hold periods and the potential for divestment. Exit discussions may be difficult given the subsequent AI disruption and peak valuations back in 2020/21," he added.