European private equity finds alternatives to IPOs

In 2025, European private equity broke records, although exits through initial public offerings are still struggling to regain traction. The ecosystem is adapting and shoring up its alternatives.

In a trend that is improving, IPOs still are not reclaiming their central role as an exit route for private equity fund managers. 

This is paradoxical: while European private equity activity hit new highs in 2025, both in terms of volume and value, IPO exits continue to slide. According to PitchBook, the number of IPOs is down 36%, and their value fell 38% - a drop that extends the weakness already seen in 2024.

Private equity deals in Europe (Source: PitchBook)

This disconnect is due to structural fragilities in Europe's stockmarkets: hard-to-sustain competitive valuations, insufficient liquidity, chronic uncertainty. An IPO no longer offers either an attractive price or reliable execution.

Consolidating alternatives 

All of which increases the pressure to find other exit routes. 

Against this backdrop, fund managers are multiplying alternatives. The investment-to-exit ratio has reached 2.5, an all-time high. And distributions to investors are stuck at 20% of net asset value, well below the ten-year average of 28%. In other words, it is currently easier to get into deals than to get out of them.

Private equity players are therefore turning to one another. Exits are now carried out mainly between sponsors, through buyouts by other funds. For the first time, these transactions have become the leading source of liquidity by value. All the more so because these funds pay more (median EV/EBITDA of 12.8x versus 8.9x for ‘corporate' acquirers - those seeking operating synergies) and provide more dependable execution.

A public-market exit is attractive when the fund manages to "sell” the company to the public in the right way, for instance by crafting a narrative around the stock's future. But the sector has seen major IPO misfires in recent years, such as Dr. Martens or Douglas. If investors see the move as a way to offload dead weight rather than a compelling long-term value-creation story, the dynamic is unlikely to reverse anytime soon. 

In parallel, alternative tools are becoming more sophisticated. Continuation funds are gaining ground - the manager sets up a new vehicle to extend the holding period for an asset while offering an exit option to existing investors. This flexible, tailor-made strategy is becoming the norm. The manager-led secondary market is deepening and becoming more structured - and is now competing with the IPO.

Manager-led secondary transactions worldwide (Source: PitchBook)