After a record-setting 2024, Europe’s private equity market entered 2025 under pressure from geopolitical tensions, macroeconomic uncertainty, and waning investor confidence. 

Deal activity declined notably in Q1, with total value dropping 24.6% and a sharp pivot toward smaller, strategic add-on deals indicating a defensive investment posture. Exit activity also slowed, with a 25.2% drop in exit count and extended holding periods, as firms waited out volatile public markets and weak valuation multiples. 

Yet some regions, like the Nordics and DACH, outperformed thanks to local stability and stronger monetary frameworks. On the fundraising front, European PE firms raised €23.7 billion in Q1, with strong interest in mid-market vehicles and new entrants like Thoma Bravo signaling optimism. 

Finsum: Despite near-term caution, the market showed resilience and adaptability, laying the groundwork for a more stable second half.