Netherlands: CMS Private Equity Study 2023

CMS Private Equity Study 2023

We are very pleased to share with you the second edition of the CMS European Private Equity Study 2023.

This study analyses hundreds of Private Equity deals that we advised on in 2022 and previous years, providing unique insights into market trends and differences between private equity and trade deals.

Key findings:

  • Deal activity remained strong until Q3 2022, but experienced a significant drop in Q4.
  • New investments accounted for 85% of PE deals analysed, with fewer exits and secondary buy-outs in 2022 compared to 2021.
  • Bidding processes decreased in 2022, potentially due to less involvement of PE funds on the sell-side.
  • Entry into new markets was the most common deal driver (64% of deals), while digitalisation was no longer a deal driver
  • Technology, media, and telecoms (TMT) was the busiest sector, followed by Real Estate & Construction and life sciences.
  • Use of MAC clauses decreased to 10% in 2022, compared to 15% in 2021.
  • Fewer FDI approvals or clearances were sought in 2022 (8%) compared to 2021 (15%).
  • W&I insurance played a prominent role in PE M&A transactions, increasing with deal value.
  • Locked box mechanisms for setting purchase price were preferred in 80% of PE deals, while purchase price adjustments decreased.
  • Earn-out provisions increased overall in 2022 but were more common in smaller deals than higher value deals.
  • ESG considerations have not yet featured in legal due diligence or transaction documents.
  • Management incentive schemes saw shorter vesting periods, increased management allocation, but tightened leaver provisions.
  • Overall, there were buyer-friendly developments in some deal metrics, such as the use of "tipping" baskets.

File Download: CMS European Private Equity Study 2023