Private Equity: Forward Thrust

Private Equity, The Netherlands | Report | Q2 2024

Recovery in the Dutch M&A market during the second quarter of 2024.

M&A activity in the Netherlands

After the least active quarter for PEs in recent years in Q1 2024, deal volume increased in Q2 2024, showing first signs of recovery in the Dutch M&A market. M&A activity increased by 22% because of improved dealmaking conditions following stable interest rates and even cuts by the European Central Bank (ECB) in June, combined with general improvement in market confidence.

Notably, PE deals represented 22% of deal activity in the Netherlands during Q2 2024, bouncing back to normal levels. Dutch PEs have shown improved deal appetite, recording 58 deals in Q2 2024 compared to 38 in Q1 2024 which represents a QoQ increase by >50%.

In the first half of 2024, LTM EV/EBITDA multiples have converged towards 9.0x. We see this stabilization as a consequence of the relative stability in the macroeconomic environment, market participants applying more realistic growth prospects and the supply of quality assets has balanced with demand, easing the competitive pressures that previously drove unsustainable valuations.

European leveraged finance market

The European leveraged syndicated loan market maintained its momentum for borrowers in Q2 2024, supported by limited but increasing new issuance and strong demand from syndicated loan investors. This pushed key market indicators to pre-Russia-Ukraine conflict levels, allowing both sponsor-owned and non-sponsor-owned borrowers to issue new debt, refinance existing debt, reprice loans, and extend maturities.

In H1 2024, the total amount of new syndicated leveraged loans issued, primarily consisting of refinances, M&A and dividend recaps, reached EUR 67.9bn. This is the highest amount seen in ten years, except for 2021 when a favorable window opened during Covid-19.

Our outlook for the remainder of 2024 remains consistent: we anticipate a positive development in M&A activity. We expect a busy summer for M&A advisors, who will be finalizing pending projects and preparing processes that will be marketed post summer aiming for a transaction before the end of the year. Given that PE exits were still at a low level in Q2, we expect that the pressure for liquidity and hence PE exits will further increase. This exit pressure would not only contribute to H2 2024, but also to 2025. On a macro level, it will be interesting to see if the geo-political developments – with our new national government, the recent UK and European elections and upcoming election campaigns in the USA – will impact M&A activity. For now, we remain positive for the remainder of 2024 and 2025. TIJN BASTIAANS, PRIVATE EQUITY COVERAGE

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