Key findings include:
- 51% of current respondents saw new investments increase in 2015. This finding is encouraging, as new investments were at a very high level already in 2014.
- The majority of respondents (85%) say that competition among private equity firms for new investments increased in 2015 compared to the previous year. This reflects the current all-time high of dry powder and favourable financing conditions.
- The largest share of respondents (62%) say that Germany will be the most active market in Continental Europe for PE investment over the next five years. This is followed by the Netherlands (52%).
- The industrial production sector (47%) and the consumer sector (36%) top the list of attractive target sectors in 2016. This chimes with announced figures for 2015, with industrials and consumer seeing the largest share of deals by volume. A sector on the rise in popularity is the business services sector. 33% named the sector as a target for new deals, compared to just 13% the previous year.
- Regulation (30%), fees (25%) and investment opportunities (20%) are key challenges ahead for the private equity industry. It remains to be seen how private equity funds will tackle these in the years ahead.
- Operational improvements has been the most important factor influencing return on investment for 75% of respondents. Almost all respondents admit it has increased in importance since the financial crisis and expect it to increase further in the future. Operational improvements (93%) and market consolidation (74%) further top the list in influencing investment rationale in 2016.
- 65% of respondents expect the private equity market to improve in 2016. 75% of German funds expect the market to improve in the coming year.
- The vast majority of 2015’s survey pool cite expansion or growth capital to be a source of new deal opportunities in 2016. This is followed by acquisitions from private owners (64%), up 9ppts from expectations in 2015.