France Battles Economic Slumps and Political Uncertainty: The Dark Times for Dealmakers

The French private equity (PE) market oozes turmoil as it stumbles into 2025 experiencing its slowest quarter in over a year. Dealmakers find themselves in a bit of a tight spot as they are forced to pull back amid deepening economic uncertainty, muddled with political gridlock and thinning exit opportunities.

This is not the merry start to the new year dealmakers anticipated. The first quarter of the year, often greeted with vigor and excitement, painted a rather grim picture. According to the 2025 Private Capital Breakdown by PitchBook, the first quarter recorded the feeblest deal value since the last quarter of 2023. This unfortunate situation rings in a near 38% quarter-over-quarter drop in total value and a staggering 27% drop in the deal count.

The political threats are just as real. Snap elections in June 2024 put France in political limbo, with a hung parliament and an uncertain policy direction. This fraught climate is generally less preferred by PE investors. US investor participation—an important catalyst for deal volume across Europe—remains disappointingly weak in France. In the past five years, PE deal value backed by US companies in France has been only 23.5%, well below the likes of the UK, Germany, and Italy.

Against such a shaky backdrop, investors are opting for safer strategies. Despite all the turmoil, B2B deals continue to be the dominant narrative, accounting for 40.5% of Q1’s deal count. The largest deal of the quarter, Ardian’s €1 billion acquisition of solar and wind developer Akuo, reflects an emerging interest in renewable energy and infrastructure assets—sectors perceived as resilient in downturns.

On a brighter note, 2025 could see the rise in more acquisitions of public companies by PE investors due to falling valuations on the CAC 40, France’s primary stock index. Owing to the market declines, private transactions may experience a significant surge. While the economic and political future of the French PE markets remains uncertain and currently uninviting, it may yet turn around as alternative sectors of interest begin to fervently emerge.