European private equity is proving more resilient than its US counterpart, but PitchBook’s latest research suggests fundraising remains highly selective and a broad-based recovery in exits has yet to emerge.
European private equity (PE) entered the second half of 2026 with growing momentum, defying a backdrop of geopolitical uncertainty, rising interest rates and persistent questions over liquidity. But while PitchBook’s latest European PE Breakdown paints a broadly positive picture, its findings suggest institutional investors should resist the temptation to declare the market fully recovered.
Instead, the data points to a more nuanced reality. Europe is becoming an increasingly compelling destination for PE capital, yet the benefits remain concentrated among the industry’s strongest managers and highest-quality assets.
As pension funds continue to reassess long-term private markets allocations amid government efforts to encourage investment into productive assets, Europe’s improving fundamentals could strengthen the case for maintaining or increasing regional exposure. The question is whether recent resilience reflects a temporary divergence from the US market or the start of a more fundamental shift.
“We think it is both,” Nicolas Moura, senior research analyst for EMEA private capital at PitchBook, told Private Markets Profile.”The cyclical element is real. European deal value held up in Q2 even as the US market contracted sharply.
“But underneath that, there is a structural story that we find more compelling. Europe is fragmented, requires localised specialisation, and has lower entry multiples than North America. Many of its largest economies, like Italy and Spain, still have deep bases of family-owned businesses that remain significantly underpenetrated by PE.
“Taking a step back, we think the gap between the European and North American markets will continue to shrink as Europe catches up in PE activity. Europe is getting bigger – that’s the long-term trend.”
Private Markets Profile: Megatrends Summit 2026 | 5 November 2026 | London
PitchBook’s data lends weight to that assessment. European deal value rose 6.9% quarter-on-quarter during Q2, putting 2026 on course for one of the strongest years on record, while US deal value fell sharply over the same period.
The report attributes Europe’s resilience to lower entry multiples, fragmented markets that continue to offer opportunities for operational improvement and growing cross-border investment, with the UK once again establishing itself as Europe’s largest PE market.
For asset owners, this suggests Europe is becoming attractive for reasons that extend beyond cyclical valuation opportunities. Rather than simply benefiting from temporary macroeconomic conditions, the region increasingly appears to offer structural characteristics that support long-term value creation.
However, the report also highlights why investors should remain cautious.
Perhaps the clearest example comes from the exit market. At first glance, the figures appear encouraging; European exit value increased almost 30% during the second quarter, reaching its highest level for three years.
Yet beneath the headline numbers lies a very different story. Almost two-thirds (65.8%) of total exit value was generated by just 22 mega-exits, while overall exit volumes remained largely unchanged. At the same time, the ratio of new deals to exits continued to widen, suggesting sponsors are acquiring companies considerably faster than they are returning capital to investors.
Strong headline exit values do not necessarily translate into broader portfolio liquidity or increased distributions. Instead, they suggest a market in which premium assets continue to command strong valuations while many other portfolio companies remain held for longer.
That same selectivity is increasingly evident in fundraising. Although deal activity has strengthened in Q2, European fundraising remains on track for its weakest year in a decade. Capital continues to flow towards established managers with proven track records, while many firms face longer fundraising periods and greater scrutiny from increasingly selective limited partners.
Institutional Investment Conferences & Summits from Longview Networks
Mid-market funds between €1 billion and €5 billion have accounted for more than half of all capital raised this year, highlighting investors’ preference for familiar names rather than emerging managers.
Moura believes this caution reflects broader market conditions rather than diminishing interest in the asset class. “We must see the bigger picture here because deal activity is improving due to the market and its participants increasing, rather than returns or deals improving at the micro level,” he said.
“LPs remain cautious because of the macroeconomic environment, which is normal, but we are seeing an increase in the number of LPs interested in PE as an asset class.”
While fundraising conditions remain challenging, PitchBook argues the issue is less about waning investor appetite than the pace at which capital is being recycled. With distributions still constrained, many LPs are concentrating commitments among managers capable of demonstrating consistent exit execution while delaying recommitments elsewhere.
For UK institutional investors, the findings also reinforce the country’s continuing importance within the European PE landscape. Despite considerable political uncertainty, the UK accounted for around 30% of European deal value during the first half of the year, supported by strong cross-border investment and continued interest from US buyers seeking attractive valuations.
While PitchBook does not make investment recommendations, Moura says three indicators will provide the clearest signals of the market’s direction: the pace of future European Central Bank rate decisions, the strength of the IPO pipeline and whether Europe’s largest buyout firms are able to close their flagship fundraising vehicles.
Taken together, those measures will reveal whether Europe’s improving fundamentals are beginning to translate into broader liquidity across the market – or whether today’s resilience remains concentrated among a relatively small group of managers and assets.