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US Private Equity Targeting European Assets

US Private Equity targeting European assets

  • M&A

London, November 2017 – A major take-away from the EuroGrowth conference, organized in London on November 6 and 7 by the Association of Corporate Growth (ACG), is that US PE firms are increasingly aware of the benefits of acquisitions in Europe.

Against superficial odds – Despite uncertainties around Brexit and the rise of protectionism around the world, the consensus is that the number of cross border M&A deals will be growing in the coming years. Interest rates are low and there is a huge amount of private equity dry powder available.  These factors are driving intense competition for high-quality assets, resulting in PE firms paying premium valuations to win the deal. Several US-based PE Groups attended EuroGrowth to look for European assets. 

Good hunting in Europe – US-based PE firms have recently increased their activity in Europe. This is not surprising: Europe has a vast array of high-quality, privately owned companies. Unlike the highly competitive environment that PEs face stateside, they will likely compete with a smaller number of bidders in auctions in Europe. The EU represents a market of around 500 million consumers. To reach them, many middle-market companies in Europe have started to internationalize their business and often penetrate emerging markets earlier than some of their North American counterparts. This makes European companies attractive as add-on acquisitions for US based platform investments.

Win-win – On the other hand, US companies can provide European companies access in the Americas. Current technology makes it significantly easier to scale a company worldwide, while making the necessary adjustments to appeal to the local markets.

For more information, please contact Gerben Groothuis.

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