Private Equity Confidence Survey – Summer 2018

Analysis

Private Equity Confidence Survey - Summer 2018

Maintaining momentum

The Private Equity Confidence Survey has been tracking the changing sentiments of the Central European investment community every six months since 2003. Deloitte Central Europe proudly presents the latest report which marks the 31st edition of the programme.

The Central European private equity market continues its strong run, with continued investments, exits, and fundraising news reported by deal doers. A growing regional economy, continued liquid leverage markets and high number of owner-managed business ripe for backing have all created the ongoing backdrop conducive to PE deal doing.

Markets thrive on certainty, and 79% of respondents expect the strong economy to be maintained (67%) or improve (12%) over the coming months. The Index thus remains high, though slightly less so than our last survey, which mirrors the economic expectations: the remaining fifth of respondents (21%) expect economic conditions to worsen, which is double the proportion of last time (10%).

The backdrop is nevertheless conducive to deal-doing, with over two thirds of respondents (69%) expecting to focus mostly on new deals in the coming months. Leverage for these deals will be plentiful, and market-leading companies will be most competitive – as is perennially the case in our survey. Pricing increases may be coming down, with a doubling (to 17%) of the percentage of respondents expecting vendors to accept less for their assets over the next year. 

Private Equity Confidence Survey

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The high level of deal activity in Central Europe’s private equity markets is set to continue, with two-thirds of respondents expecting market activity to remain the same, the highest level in three years. Nearly a third (31%) expect activity to increase further from its currently high level, and just 2% expect activity to slow down – the lowest level in five years.

The promising activity seen in the CE PE markets over the last 18 months continues, with strong economic fundamentals continuing to support high levels of exits and deals. Local deal doers are nurturing many of the region’s maturing owner-managed businesses, while foreign investors – financial as well as trade – are increasingly looking to the region for some of the more established businesses. Their interest is testament to the successful businesses which have grown into leading, global companies, many under the stewardship of the region’s local private equity houses.

Balázs Csűrös, Partner at Deloitte Advisory