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European private equity - statistics & facts

Private equity (PE) is money (capital) invested into companies that are not publicly traded. Private equity consists of investors and funds that make investments directly into companies with the mission of seeing a high rate of return on their investment. Private equity deals have a timeline in which investors will look to exit from their investment and ultimately make profit. In certain European countries, investments directed to private equity objects represented a considerable share of their gross domestic product (GDP). For instance, in 2020, almost 1.4 percent of the United Kingdom’s GDP were attributed to private equity investments.

Venture capital & buyouts: a trade-off between risk and profitability

The two main types of private equity funds include venture capital (VC) and buyouts. Venture capital consists of funding pools that tend to be invested in small business or start-ups that have a high potential for considerable growth. As a strategy, VC funding may carry higher risks as new emerging companies tend not to have a proven track record of success, but the potential return on investment (ROI) can be far higher. Private equity buyouts look at mature firms that may be undervalued or underperforming and consist of more than a 50 percent acquisition of the company. Although private equity deals may not live up to the size of the largest acquisitions, they can still reach huge values.

Private equity in Europe is booming

The European PE landscape has been growing in recent years. 2020 has seen the highest number of private equity deals ever made in Europe. Within Europe, the United Kingdom (UK) is the largest market, with average deal sizes far higher than in any other European country.

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