One in five (19.2%) private equity firms across Europe and the UK plan to reposition their business strategies in the next 12 months.
According to a survey by the US-based law firm Ropes & Gray the repositioning, which is being driven by increased competition for investor capital and rising US investor interest in European assets, is set to transform the European private equity landscape.
According to the firm’s newly-published European Private Capital Report, “Growth, Innovation and Resilience: What to expect from private equity in Europe in 2026,” firms are adjusting their strategies in response to significant market shifts, with larger firms pursuing consolidation and deeper sector expertise, while smaller firms focus on differentiation and specialisation to remain competitive.
Elizabeth Todd, Partner and Co-Lead of European Private Equity Transactions at Ropes & Gray, commented: “It seems inevitable that we’re going to see more consolidation. There are so many competing opportunities for LPs’ funds, some GPs are going to struggle to get LP engagement and raise funds. As part of that consolidation, we will continue to see some of the strong players become very, very large asset managers.”
Cataldo Piccarreta, Partner and Co-Lead of European Private Equity Transactions at Ropes & Gray, added: “Larger firms have more access to new markets, as well as more public assets that garner greater interest from buyers. Bigger assets create more capital that has more liquidity potential, and that catches the eye of investors. This environment means smaller firms are having to be more selective in their approach, with small funds now often focused purely on specific areas and specific sectors.”
The report also highlights a renewed sense of optimism in the market, with more than half (52.1%) of respondents describing themselves as “very confident” for the year ahead. This is partly based on an anticipated surge in US investor interest in European private equity, driven by attractive valuations, perceived political and regulatory stability, and a record USD $1.1 trillion in US “dry powder” seeking deployment. European assets are increasingly seen as compelling alternatives to US investments, with US investors looking to diversify and capitalise on opportunities in a stabilising European market.
The report concludes that firms able to strategically reposition and respond to international investor interest will be best placed to capitalise on new opportunities in a competitive and dynamic market.
