Our clients at leading European private equity (PE) firms across Europe, are witnessing significant shifts in the PE market in the last six months which is influencing the finance leadership talent market.

Kieran Price, Principal of Bronzegate’s Finance & Strategy Leadership practice, shares his thoughts on the opportunities and challenges ahead.

Market Activity: Despite a difficult exit environment PE deal activity there is still an appetite in the market for deals in particular for bolt-ons which made up 55% of all deals completed so far this year*. Private equity firms are actively pursuing investments, with a focus on sectors like technology, healthcare, and renewable energy and we are seeing a demand for CFOs in this sector, especially in the Software and SAAS industries.

Valuations and Competition: Valuations are high due to intense competition for quality assets. This competition is driven by the abundance of dry powder that private equity firms need to deploy. More than 30% of the buyout-back inventory has been held for over five years, and more than 12% has been held for over seven years*. What we have seen as a result is an increase in ‘burnout’ of management teams who are under pressure to deliver and also a trend from PE to try and ‘upskill’ existing management teams in attempt to drive the bottom line.

Fundraising: Fundraising remains robust, driven by strong investor interest in private equity. The European fundraising value for 2024 Q1 stood at $68.6 billion across 33 funds*. This represents a record quarter for Europe, as it captured over half of the region’s total for the entire year of 2023 in just three months. Expectations are for Q2 to return to pre-pandemic levels.

Exit Strategies: We are seeing some green shoots in the early part of the year, but exit activity is still extremely low and below its long-term trend for almost two years. The preferred exit routes are initial public offerings (IPOs) and sales to strategic buyers.

Focus on the numbers: The ability for Portfolio CFOs to deliver impactful insights and meaningful reports and analysis is key to their success in the eyes of the Investor** The focus on the data has seen an increase in the importance of the FP&A function within portfolio companies.

FP&A plays a key role in preparing for exits by optimising financial performance and presenting a compelling financial story to potential buyers or public markets.  A strong FP&A function will help to identify the right time and method for exit to maximise returns.

The permanent and interim finance leader market remains very active despite the low number of exits. We are seeing CFOs looking to bolster their reporting functions with the hires of experience FP&A directors or by bringing in interim to support to help upskill the existing functions. We are seeing an increase in the number of these positions available within our Finance Leader & Strategy Practice.

Kieran Price, Principal, specialises in Private Equity Finance Leader & Strategy appointments

Contact Kieran Price >>

*Pitchbook 2024

** Bronzegate 2024 CFO Analysis