Many company investments in the portfolios of private equity firms should have been sold long ago. However, rising inflation, higher interest rates, and the sluggish economy prevented many planned deals from being realised last year. In Europe, the number of private equity transactions shrank by 20% in 2023 and the volume by 60% because buyers and sellers were often unable to agree on a price when valuations fell.

Over the past two years, many private equity funds have held on to their portfolio companies for longer than they normally would, with a holding period of four to seven years, and have postponed transactions. In a previously unpublished study, the PwC strategy consultancy Strategy& estimates the backlog of "overdue" unsold private equity portfolio companies in Europe at over 250 companies that are still in the possession of financial investors as "slow sellers" and are now likely to come back into the shop window.

In 2024, private equity firms could, therefore, start a race to catch up in terms of exits. If the 250 "overdue" company investments were all placed on the market, the number of deals would double what would be expected under normal circumstances. "Inflation is falling, and interest rates are also likely to fall, all that will reduce uncertainty for investors," says Dominik Roland from Strategy&. "We, therefore, expect a wave of pent-up assets to come onto the market." Especially as the coffers of financial investors with capital commitments – in technical jargon, "dry powder" – totalling an estimated 2.6 trillion dollars are well filled.

More than 60% of the "overdue" company investments come from the consumer, industrial and commercial services sectors. At 85%, the vast majority of these companies have a turnover of between 100 million and 500 million euros and are typically valued at twice their revenues. In Strategy&'s view, this opens up a particularly large number of buying opportunities for larger mid-cap funds.

In Germany, the Bonn-based software company SER Group from Carlyle's portfolio and the heating meter reading company Techem from the Swiss Partners Group are currently up for sale. The same applies to KKR's car park operator Q-Park. Armoured gearbox manufacturer Renk, which is owned by Triton and whose IPO was cancelled at the last minute last year, can also be considered "overdue". The petrol card provider DKV Mobility and the perfumery chain Douglas – both owned by CVC and both stock market candidates – are also overdue, as is the long-distance bus operator Flix, owned by General Atlantic.

However, it will not necessarily become easier for all "overdue" exit deals in 2024. The healthcare sector is an exception. Since German Health Minister Karl Lauterbach threatened investors in medical care centres and doctor chains with new regulations and since the Orpea scandal in France led to the nationalisation of the retirement home operator, private equity companies have been avoiding the healthcare sector in order to evade incalculable compliance risks. Nordic Capital, for example, has been sitting on Germany's second-largest retirement home chain, Alloheim, for two years now. The situation is similar to the psychiatric Oberberg Kliniken of US financial investor Trilantic Capital.