Europe’s Repricing: Public Signals, Private Opportunities
June 26, 2025
Continental Drift
European equities have staged a quiet but meaningful comeback in 2025, outpacing their U.S. counterparts for the first time in years. The Stoxx Europe 50 is up over 20% YTD, while Germany’s DAX has surged more than 30%, buoyed by falling inflation, a more dovish ECB, and fiscal spending across energy, infrastructure, and defense.
Structural reform efforts in key economies like Germany and France restore investor confidence, while the weaker euro continues to benefit European exporters. As valuation gaps with the U.S. remain wide, institutional allocators are beginning to revisit Europe—not just as a value play, but as a source of stability and secular growth.
Unlocking Value in Europe’s Middle Market
The European middle market, composed mainly of under-optimized, family-owned businesses, continues to be a significant source of private equity alpha, offering lower entry multiples and greater operational upside. Historically, European middle-market buyouts have yielded higher IRRs than large-cap deals, with less leverage.
However, U.S. investors face challenges like manager fragmentation, regional nuances, and cross-border regulatory hurdles. Partnering with a trusted institutional allocator—one with embedded relationships, underwriting discipline, and the ability to co-invest alongside lead sponsors—can provide both access and efficiency in an increasingly complex ecosystem.
Here are a few questions to consider as you strategize how to scale your business:
- Are you positioned for a European rebound?
- Are you maintaining a well diversified private equity sleeve?
- How are you managing diligence and oversight across borders?
