European M&A Outlook and Private Credit in Focus at SuperReturn Conference Amid Celebrities and Protests

In Berlin’s most recent SuperReturn Conference, the current realities of European private markets took center stage. One of the main challenges identified was the struggle faced by private equity in completing deals due to a sluggish M&A pipeline and an unfriendly exit environment. This situation, in turn, affects the steady upward trajectory of private credit, leading to the elimination of smaller managers as the asset type matures.
The conference, spiced up by celebrity appearances seeking funds for their ventures, revealed a dichotomy of optimism and uncertainty. There was renewed trust in the M&A pipeline for mid-market businesses, and a refreshed investor interest in the European market, despite overall M&A prospects remaining subdued.
A discussion on the valuation gap shed some light on the current M&A inertia. Market participants blamed inflated valuations for the stagnation, raising concerns over the accuracy of asset valuation and the growing impatience of Limited Partners (LPs).
The market is witnessing an increased return of complex assets, compounding the existing challenges. The persistent valuation gap has led to more private equity firms transferring their assets to continuation vehicles, sparking a significant conversation at the conference.
While continuation funds are sometimes positioned as a win-win, the sentiment at the SuperReturn Conference suggested that traditional exits are the preferred route. The process of setting up a continuation vehicle was also identified as arduous, raising concerns about fair valuation.
In this complex and unpredictable ecosystem, patience, due diligence, and relentless business scrutiny emerge as critical tools for surviving, thriving, and navigating through the peaks and valleys of the European private markets arena.