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European PE market: SMEs more optimistic than 6 months ago, but the investment field remains in “wait and see” mode
29.10.2025
European PE deal value continued to slow down in Q2 2025, with investors showing signs of caution after President Trump’s tariff announcements in April. In a context of higher volatility, investors continued to favor smaller build-ups and follow-ons (1/2 of total deal count) compared to larger primary investments. A similar downward trend was observed on the exit side, with exit value down by 23% compared to Q1 2025[1]. As an illustration of investors’ “wait-and-see” attitude, the average valuation of mid-market European transactions monitored by the Argos Index went down in Q2 2025 after two quarters of successive increase, reaching 9.2x EV/EBITDA, with a growing discrepancy between corporate and financial buyers.[2]
In this environment, business leaders of European SMEs expect modest activity growth in 2025, although they have slightly revised their outlook upward in H1 2025: according to the 81st economic survey conducted by Bpifrance Le Lab on SMEs’ market sentiment[3], the business confidence balance stands at -4, a 2-point improvement over 6 months, yet still 18 points below its long-term average. Some categories of SMEs have a better perspective: SMEs with at least 100 employees thus anticipate an acceleration over the course of 2025. Despite increasingly favorable access to credit, investment by SMEs is expected to decline over the year. Only 38% of business leaders plan to invest, compared to 43% in 2024, and the amounts mentioned in the survey are decreasing significantly. Only green investments should hold up better.
[1] Source: Pitchbook, “Q2 2025 European PE Breakdown”, July 2025
[2] Source: CFNEWS, “Les valorisations des PME/ETI continuent de baisser », 24 July 2025
[3] Source: BPIfrance, “Bpifrance Le Lab présente la 81eme enquête de conjoncture auprès des TPE- PME : Des dirigeants de TPE-PME un peu plus optimistes qu’il y a 6 mois mais encore beaucoup d’attentisme, en particulier sur l’investissement », 10 July 2025
