Hello there!
As we prepare for a busy return after the holidays, we want to spotlight how U.S. trade policy — particularly tariffs — is weighing on European private equity and global fundraising alike.
In the spring, tariff announcements from U.S. President Donald Trump triggered volatility across global markets. In Europe, private equity deal value declined 10.5% quarter-over-quarter as investors slowed activity in April, uncertain whether the tariffs would remain or prove temporary. Deal count showed modest growth of 3.1%, but activity skewed toward smaller add-on transactions, which now represent more than half of all deals.
Who’s feeling the heat?
Not all countries are affected equally. Switzerland, Ireland, and Germany are taking the hardest hits, according to Pitchbook:
Switzerland faces one of the steepest tariffs in Europe, at 31%, affecting exports such as watches, medical devices, and chocolate.
Ireland sends over a quarter of its exports to the U.S., largely in tech and pharma — nearly €72 billion last year.
Germany, with €250 billion in annual trade with the U.S., is particularly exposed in the automotive, machinery, and chemical sectors.
Italy’s luxury goods and food exports are also under pressure, while Nordic export-driven economies are watching nervously.
The most vulnerable sectors are B2B and B2C, which together represent nearly two-thirds of PE-backed companies in Europe. Industrials, machinery, construction, consumer goods, autos, and retail are at the forefront of risk. With 42% of Europe’s PE-backed companies held for more than five years, tariffs are intensifying exit pressures just as IPO markets remain sluggish. Exit activity fell 22.9% in Q2, and mega-exits are on track for their weakest year since 2019.
Around 42% of Europe’s PE-backed companies have been held for more than five years, which increases pressure to exit. With IPO markets still slow and valuations unstable, tariffs are broadening the gap between buyer and seller expectations. Exit activity declined 22.9% in Q2, and mega-exits are on track for their weakest year since 2019.
Zooming out, these political shocks compound broader headwinds in private capital globally. Venture and PE fundraising fell to $592 billion in the 12 months to June — the lowest in seven years. Despite offering unprecedented incentives such as reduced management fees, early-commitment discounts, and fee rebates, firms are struggling to raise capital. Many LPs remain frustrated by limited liquidity: in 2024, only 11% of assets were returned, the lowest since 2009, according to Bain.
Trump’s tariffs further dented sentiment. A Campbell Lutyens survey found that 33% of LPs slowed commitments to private markets after the tariffs, with another 8% pausing entirely. Meanwhile, in Europe, saturation is intensifying the competition for capital, as megafunds like Advent, Permira, and Bridgepoint simultaneously return to the market.
In short, the combination of tariffs, political uncertainty, and macroeconomic pressure is reshaping private equity and venture capital. Managers are being forced to rewrite the fundraising playbook — offering concessions and sharpening their narratives — while LPs prioritize liquidity recovery and scrutinize every commitment more carefully than before.
But it’s not all doom and gloom.
If there’s a silver lining, it’s that US investors remain surprisingly active in Europe despite the trade drama. In fact, eight of the top 10 deals in Q2 involved at least one US sponsor, and overall US participation in European PE deal value hit its highest share since 2022
Expectations? Short-term pain, long-term changes.
The first wave of impact is already visible. European stock markets faced a challenge in April, with sectors such as autos, basic materials, and banks leading the decline.
Tariffs have slowed momentum and increased uncertainty, especially in industrially heavy regions such as DACH. However, European PE activity continues.
The UK secured an early bilateral agreement with the US, providing stability to its market, while central banks across Europe cut rates to maintain liquidity. Historical trends also show that periods of disruption often lead to more innovative dealmaking, including sponsor-to-sponsor exits and continuation funds.
In the near term, tariffs may continue to present challenges, but they are also changing the market landscape by steering European private equity toward smaller, more targeted deals, sharper strategies, and increased international investor involvement.
Additionally, there are a few other spillover effects worth watching:
Take-private opportunities – Lower share prices mean PE firms with dry powder could scoop up listed companies at attractive valuations.
The denominator effect – If public markets stay weak, LPs may rebalance by cutting PE allocations, tightening fundraising.
More secondaries – With exits difficult, GPs and LPs may increasingly sell portfolios on the secondary market.
US investors are pulling back – Today, one in five European PE deals includes a US investor, but if sentiment sours, that share could fall.
In this uncertain backdrop, fund managers are recognizing the advantage of leaning into turnaround opportunities via acquisitions and secondary market opportunities, as extended holding periods and operational optimization become new norms.
The Role of GP-Led Secondaries More Than a Niche: Insights from Schroders Capital
In a recent interview, Petr Poldauf, Senior Investment Director at Schroders Capital, shared his insights on how GP-led secondaries are evolving from niche solutions into essential tools for private equity firms.
Drawing from Schroders’ experience in the European market—particularly in Central and Eastern Europe—Petr explores how secondaries are enabling liquidity, extending holding periods for high-performing assets, and offering LPs more flexible exit options in today’s constrained environment.
Exploring the Mid-Market Momentum at 0100 International: "LPs Shift to Mid-Market: What’s in Store for PE Fundraising Next?"
As private equity adapts to a changing market, join us this October at 0100 International for a timely panel: “LPs Shift to Mid-Market: What’s in Store for PE Fundraising Next?”
This discussion will bring together four leading voices in the LP community: Bernardo Marques Dos Santos (Principal, Qualitas Funds), Marcus Johannisson (Partner & Head, Coeli Investment Partners), Marcus Storr (Head of Alternatives, FERI), and Nicolas Petitjean (Managing Director, Partners Group). Together, they’ll unpack how LPs are reassessing allocations in today’s uncertain macro environment and why mid-market funds are gaining prominence.
The session will explore how today’s market conditions are reshaping GP-LP dynamics, what it means for large-cap and emerging managers, and how LPs are navigating valuation sensitivity, dry powder concerns, and the search for differentiated returns.
Across the Market | Key Perspectives on US Tariffs
📃 Article | How Do Tariffs Impact Private Equity? Uncertainty Brings Opportunity
Private equity entered 2025 on an optimistic note, but fresh U.S. tariffs quickly introduced uncertainty, slowing exits and complicating valuations. While sectors like technology, business services, and healthcare continued to thrive, tariff-sensitive industries such as industrials and manufacturing faced delays, repricing, and suspended sale processes.
Consero argues that volatility also creates openings for firms with the right tools. They highlight how private equity sponsors can adapt by enhancing diligence on supply chains, optimizing portfolio operations, and leaning into automation and financial planning to protect margins.
📃 Article | Europe's VCs weigh Trump tariffs impact: 'They're bad for everyone'
Tariffs have shaken global markets, leaving European VCs to weigh the fallout for startups and funding. Investors warn that LPs, already overexposed to riskier private markets, may retreat toward safer assets, such as fixed income and safe-haven currencies.
Still, some VCs see opportunity in the turbulence. Several argue that early-stage fundraising will remain largely insulated, as smaller startups are less tied to public market swings. Crises, they note, often spark new company creation and make early bets more attractive.
📃 Article | Why tariffs might not terrify private equity investors
While Trump’s tariffs have rattled markets, Kepler argues that private equity is relatively shielded compared to the broader economy. Most PE portfolios are concentrated in service-heavy industries, such as IT, healthcare, and financial services, where value is derived from intellectual property and innovation rather than imported goods.
In contrast, sectors most exposed to tariffs—industrials, consumer goods, and materials—represent nearly half of GDP but less than a quarter of PE net asset value.