The long-awaited rebound is unlikely to happen in 2025. The French private equity market is also experiencing the consequences of the ‘Trump shock’. While many experts had anticipated a recovery, this has now been severely hampered by the trade war triggered by the US administration. In this article, experts from AURIS Finance, a mergers and acquisitions consultancy, share their analysis.
After describing the trade imbalance between the United States and Europe as ‘atrocious’, Donald Trump imposed 20% tariffs on most products exported to the United States. This measure affects around 70% of exports from European countries. The European automotive sector has been particularly hard hit, with tariffs of up to 25%. These measures were subsequently scaled back, with duties ultimately capped at 10%. While this reversal temporarily eased market concerns, uncertainty continues to weigh on the global economy.
Trade tensions
While the private equity sector may appear to be less exposed to the fluctuations of international trade than CAC 40 companies, it is nevertheless affected. The sector is not isolated from the rest of the economy, and in the coming months, companies looking to sell or raise capital will be operating in a sluggish growth environment. Following the recent remarks of the 47th President of the United States, the Bank of France has revised its growth forecast for 2025 downward, from +0.9% to +0.6%.
Large-scale operations
France Invest’s annual activity report, conducted in partnership with Grant Thornton, shows that in 2023 private equity investors invested €36.9 billion in French companies. This figure has increased by 13% in comparison with last year. In Europe, acquisitions reached $317 billion in 2024, representing an 8% year-on-year increase. While the figures are rising, they remain significantly below the levels recorded in 2021. On the disposal side, the volume of transactions remained stable in 2024, while the value increased in line with a rise in the number of large disposals.
Uncertainties
How will things look in 2025? At the start of this year, several French companies have attracted international investors. The Abu Dhabi sovereign wealth fund has invested in the French company European Camping Group, while renewable energy producer Akuo has been acquired by the Ardian fund. However, there are growing signs of uncertainty: the holding period for companies in portfolios is lengthening, now averaging six years in Europe, a sign that funds are struggling to liquidate their positions. At the same time, prices continue to fall, with valuation levels unmatched in 2021. Significant discounts are being applied to the worst-performing and riskiest assets. Finally, IPOs (initial public offerings) remain a relatively rare exit route for funds.
Our experts at your service
In an environment where certainty is diminishing, private equity funds are adopting a particularly cautious approach. Due diligence is becoming more complex and thorough. While ESG criteria were central in previous years, macroeconomic risks are now being scrutinised. In this context, investors are only willing to provide funding to companies that demonstrate strong short- or medium-term profitability potential. AURIS Finance’s experts are specialised by sector. We will support you throughout your search for financial partners.
