Private Equity: Riding the Wave

Private Equity, The Netherlands | Report | Q3 2024

Dealmaking in the Netherlands remained stable in Q3 2024, fueled by an uptick in PE activity.

M&A activity in the Netherlands

After a slow start in 2024, the Dutch M&A market rebounded in both Q2 and Q3 with deal volumes on the rise. Notably, PE-related deals experienced a significant increase of 26%, bringing activity back to pre-2024 levels (27% of M&A activity). This highlights increasing deal appetite among PEs, becoming acclimatized to stabilizing economic factors, such as normalized inflation and declining interest rates as monetary easing is in full swing, although PE-exits remain relatively low.

Higher mid-market transactions stood out in Q3 2024, particularly €100–250m and €250–500m deals. While add-on acquisitions have dominated over the past year, the focus is shifting back toward platform investments. Meanwhile, the €500m+ segment has remained stable at a fairly low level. Despite ongoing market uncertainties, we believe this could mark the beginning of a positive shift, particularly for upper mid-market deals. This aligns with Oaklins Netherlands’ current mandates and pipeline of mandates anticipated to be launched in the coming six months.

In Q3 2024, the LTM median EV/EBITDA multiples stabilized around 9.0x as a result of easing tempered inflation and declining interest rates. While global uncertainties persist, cautious optimism is emerging, driven by expectations of a 'soft landing' for the economy. This sentiment suggests that overall valuations could remain stable, or even increase slightly, over the next six months.

European leveraged finance market

The European institutional leveraged loan market has maintained strong momentum through Q3-24. Total activity, including repricing, extensions, refinancings, and new money issuance, reached €157.0bn in the first nine months of the year, surpassing any comparable period since 2014. This momentum is supported by strong technical factors, with limited new money issuance from borrowers but increasing demand from loan investors.

Refinancing remains the primary driver of 2024, with three waves totaling €39.2bn, breaking 2017’s previous record of €33.7bn. While the first half of the year saw more pronounced reductions in spreads, Q3- 24 still saw borrowers saving 56.3bps, down from 71.4bps in Q1-24. Additionally, borrowers took advantage of favorable market conditions to extend existing loans, with €42.3bn in extensions in 2024 alone.

PE involvement is still on the rise and remains an important driver for the Q-on-Q growth in announced transactions. On the other hand, this activity is mainly on the buy-side—both in new platforms as well as in the execution of buy-and-build strategies, with PE exits remaining historically low. Looking at the different size brackets, we see that upper midmarket transactions are on the rise, representing a modest increase in deal volume compared to the previous quarter. Our outlook for the remainder of 2024 and 2025 remains consistent: we anticipate a positive development in M&A activity. While not underestimating the potential impact of geopolitical tensions and uncertainties, we foresee a positive environment for strong M&A activity. Not only because of more certainty in the economic situation, inflation and interest rates, but mainly because postponed (PE-) exit processes will boost M&A activity in the future. TIJN BASTIAANS, PRIVATE EQUITY COVERAGE

Download PDF

For more expert commentary in this sector, download the report below.