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Bailey McCann, Opalesque New York:

European private equity could face some headwinds through the end of this year according to a new report from data provider CEPRES.

CEPRES has a cautiously optimistic outlook on buyouts overall, driven by factors such as improved regulations and increased investor interest. Europe is expected to see moderate economic growth in 2024, albeit with significant national variations. This growth could present opportunities for private equity firms to invest in expanding companies, the report notes.

CEPRES anticipates that persistently higher interest rates and cost of capital will cause private equity firms to pivot to strategies that add value to their portfolio companies while they wait for capital costs to improve. Those strategies could include operational improvements, strategic partnerships, or digital transformation. Higher borrowing costs could reduce the profitability of leveraged buyouts, and inflation could erode the real value of investments, those realities are already showing up in deal volume data.

There are some sectors showing signs of growth however. Technology, healthcare, and renewable energy sectors have all shown positive revenue growth and could provide opportunities for private equity investors, the report says.

Private equity firms looking at these deals may run into increased competition. CEPRES notes that there i......................

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