Private Equity Breakdown for 2021

08 November 2021

By Ed Rossiter

Private Equity Breakdown for 2021


With the first month of Q4 swiftly coming to a close, it is interesting to announce that European private equity has hit a new annual record. This thriving environment for private equity deal making can be attributed to strong leveraged lending markets, willing sellers, heightened dry powder, and massive stimulus. We saw a whopping one in three deals closing across the UK and Ireland, and in the business products and services sector. PitchBook anticipates deal activity to slow, however, as we are steadily catching up on 2020’s ‘down year’. We’re potentially at risk of increased long-term inflation, effects of the Delta variant, and the prospect of tightening fiscal monetary policy. 


Looking back, Q3 proved to be an interesting quarter, what with breaking quarterly and annual records. We saw exit volume reach a peak for quarterly and YTD exit value surpassing all previous years’ annual figures due to the large uplift in liquidity mainly driven by corporate acquisitions. Private equity in the Nordic region has had a stellar opening three quarters and the IT sector is looking to account for the bulk of private equity exit value for the first time. Fundraising cooled off slightly in the second half of 2021, although green shoots of recovery are finally being seen. Let’s take an in depth look at what has happened and what is to come in the private equity sector now. 




As we mentioned above, this year’s third quarter has hit a new annual record with 5,492 deals worth €548.7 billion closed, compared to 4,511 in 2019. Deal volume over deal size is said to be behind the record deal value as deal volume rose 96.1% compared to the first three quarters of 2020. The industry in regards to deal value has essentially tripled in size in the last decade. With that in mind, it’s important to note that median and average size deals saw lower YoY increases. What caused this great environment for deal making? These leveraged lending markets were mainly driven by institutional investors looking for yield and unprecedented monetary stimulus. Interestingly, new sets of deals were brought to life such as the sports industry as the pandemic decimated their cash flows. This was spurred on by the volume of dry powder allowing people the opportunity to aggressively acquire companies. Injections and vaccines kept the economy relatively stable, which was critical in this uncertain time. With all this good news it’s not surprising that we are expected to see deal activity slowing down in Q4 as sponsors near the completion of their catch up from 2020. GPs believe the peak of PE deals have been met and will soon taper off and normalise. Dealmakers are becoming wary of higher long-term inflation, the Delta variant, supply chain bottlenecks, rising raw materials costs, and higher interest rates causing financing deals and servicing debt to become more expensive. 

In the financial services sector through Q3, there were 247 deals worth €38.3 billion - a YoY increase of 43.3% and 65.2% respectively. The insurance space occupied the bulk of deal volume and saw a 20% increase as GPs targeted insurance brokers, these deals accounted for over three quarters of closed deals through the quarter. This interest in insurance brokers comes mainly from subsector’s fragmentation, light capital intensiveness, the lack of regulation, and stable free cash flows. With the low rates of organic growth and volume of small players in this sector, growth via scale proved critical. Sponsors, thus, are exhibiting multiple arbitrage by executing roll-up strategies by acquiring smaller players at low multiples and selling larger platforms for a substantially higher multiple. 

The media and information services sector saw 143 deals through Q3. Sponsors were drawn to this sector because of its resilience during COVID-19 and its adaptability in a technology interrupted environment. Their business models are this durable because of low customer concentration, high operating margins, and recurring revenue streams. EQT and Blackstone injected €372.9 million into Swedish business Epidemic Sound, who have a subscription based business model that offers a catalog of music tracks for content creators to use with the rights included. This is off the back of video content accounting for over 82% of consumer internet traffic. Sports media rights companies have received interest due to their sticky, real-time, and distinctive content. 

Deals by sector and region

Share of private equity deal value by sector: 

  • Business products and services saw roughly 27%

  • Consumer products and services saw roughly 25%

  • IT saw roughly 18%

Share of private equity deal count by sector: 

  • Business products and services saw roughly 33%

  • Consumer products and services saw roughly 19% 

  • IT saw roughly 22%

Share of private equity deal value by region: 

  • UK and Ireland saw roughly 33%

  • France and Benelux saw roughly 22% 

  • Nordic Region saw roughly 8%

Share of private equity deal count by region: 

  • UK and Ireland saw roughly 31%

  • France and Benelux saw roughly 24%

  • Nordic Region saw roughly 11%


Exit activity continues to quicken in European private equity sectors, with quarterly and annual records being hit. The third quarter of 2021 saw 425 exits closed worth €126.4 billion and a YoY increase of 96% and 202.% respectively. Volume wise, the main drivers proved to be three major liquidity events. Denmark-based Nets, Sweden headquartered Oatly, and Denmark-based STARK Group, all whom accounted for over 35% of the Nordic regions YTD exit value. Private equity in the IT sector saw €71.8 billion worth of liquidity events closed in this sector and it is said that the IT sector is said to account for the bulk of exit value across all sectors for the first time at close to 30%. Sponsors are eager to invest and divest in IT assets. SPAC acquirers interest in this growing sector is seeing increased competition, it is fuelling valuations and encouraging more PE exits overall. 


Q3 private equity fundraising in Europe has cooled down with 104 private equity funds closed worth an aggregated €88.3 billion. This is 2021’s lowest annual fund count total since 2012. LPs are backing GPs that provide them first class service, have a strong track record, and have a clear differentiated strategy in secular growth industries, such as impact, climate change, IT, and healthcare. LPs, however, are slightly concerned about the tightening policy and rising inflation, but seem to remain positive on private market allocations. We saw 12 first time PE funds closed worth an aggregated €5.3 billion in Q3, this is moving towards the lowest fund count total ever. The pandemic forced LPs to become more discerning when allocating to first time funds due to the pandemic which can account for this poor fundraising performance. Although, these have the potential because of favourable fee structures, share in GP management fees and carry pool, and the exposure to niche specialist investment strategies. As the private equity industry matures, first time managers may see fewer opportunities but can rest assured that capital will always flow to compelling market opportunities. 

With most sectors looking positive as we near the end of the year, it will be interesting to see if the catch-up from 2020 is well and truly finished or will this momentum continue into 2022? Get in contact with our team at Phoenix to share your thoughts. 

The figures and information in this article can be attributed to the amazing and thorough report completed by PitchBook, so if you would like to read more, check them out! 

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