Europe: increasing number of searchers vs rate of exits?

April 25, 2024

by a searcher from Università Bocconi in Rome, Metropolitan City of Rome Capital, Italy

It appears that the number of searchers in Europe has experienced a significant increase in 2024, with some markets seeing up to three times more searchers compared to previous years. Interestingly, during this period, investors have observed a slowdown in exits compared to North America. Does anyone have any interesting insights or data to share on this trend?

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Reply by a searcher
from IESE Business School in Valencia, España

Taking into account the exploration phase, the maturation period, and the scale of markets in Europe, it is estimated to span approximately 7 to 10 years. Spain currently stands out as one of the more developed international markets, largely attributed to the contributions of IESE. According to my market insights, there are indications of forthcoming new exits in Spain, with other markets poised to follow suit. It's likely that Europe is in a similar position now as the US was 15 years ago, with new institutional investors currently raising funds, suggesting potential for the model to scale in the coming years therefore significant increase of searchers. One point that we have to consider is that probably the ratio of not buying a company could be increased.

Reply by a searcher
from INSEAD in Brussels, Belgium

To me these seem like two separate points that are not necessarily linked. One, exits in N. America are fewer. And two, searchers in Europe are increasing. On the first this is quite intuitive - M&A activity is linked to economic activity, financing conditions, etc. In the US, and generally speaking across the world, it is well known that fewer companies are being sold (I am sure you have read how the holding periods of PE funds has increased since rates have increased). People are just waiting/hoping for valuations to recover to pre###-###-#### Re more searchers in Europe, I don’t have data but anecdotally I have seen this.

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