FRANCE TRENDS AND DEVELOPMENTS Contributed by: Hugo Sanchez de la Espada, Véronique Millischer, Olivia Chriqui-Guiot, Robin Gaulier and Aurore Cormary, Baker McKenzie
IPOs for three consecutive years and muted corporate risk appetite – has narrowed traditional exit routes and encouraged funds to hold assets rather than sell at discounts. Crucially, assets acquired pre-2020 and in 2021–22 often remain over-valued in fund accounts, making sponsors reluctant to dispose for fear of crys - tallising potential losses. Consequently, the average holding periods have extended to 6.1 years. Political and macro volatility – including renewed US tariff increases and a fragile French political context – have both amplified uncertainty and price disper - sion, further discouraging exits. In response, GPs have leaned on alternative routes to exits: the second - ary market has rebounded, with sponsor-to-sponsor deals gaining share, while continuation funds have remained ever-popular, allowing managers to retain assets longer and keep working on value creation to expect greater returns without forcing immediate exits. This confirms a continued global trend (not spe - cific to France). Indeed, continuation funds now rep - resent almost 40% of the secondary market globally, with the overall secondary market exceeding USD160 billion annually. Other tools (such as net asset value (NAV) financing and signing-to-closing bridge facili - ties) have also gained traction, allowing support for the extension of asset holding periods and distribu - tions to limited partners. Despite these headwinds, the near-term outlook for 2025 is more constructive. A significant number of deals were announced at the end of the first semester, pointing to a pick-up in transaction volumes through the rest of the year. Activity is expected to concentrate on premium, mature assets, where pricing is less vola - tile and underwriting clearer. Competition remains intense, not only among pri - vate equity sponsors but also from cash-rich fam - ily offices and business families, which continue to target premium assets – as illustrated by high-profile transactions, such as Ceva Santé Animale backed by the Bettencourt-Meyers and Mérieux families. While some fund managers have exited the French market, these moves reflect performance challenges rather than a decline in France’s attractiveness. The country remains a mature, sophisticated buyout ecosystem,
with experienced managers and a deep pool of pri - vately owned growth companies. Venture capital The French venture capital (VC) market continued to struggle in 2025, with start-ups raising only EUR2.78 billion in the first half of the year – a 35% drop com - pared to the same period in 2024, and the lowest level since 2020. The number of deals also fell by 24%, reflecting a persistent slowdown after several years of rapid expansion. France lost its position as the second-largest VC market in continental Europe, overtaken by Germany. The market is marked by heightened selectivity from investors, longer fundraising cycles, and a growing reliance on public support (especially in deeptech, where private capital has become scarcer). The lack of exits (both IPOs and M&A) remains a major chal - lenge, limiting capital recycling and the emergence of new champions. As a result, secondary transactions are becoming more common, but they do not fully address the liquidity needs of the ecosystem. Overall, the French VC market faces a period of consolida - tion and uncertainty, with investors prioritising resilient business models and growth in AI, while the broader Despite a challenging global context in 2025, notably impacted by US cross-border investments’ contrac - tion by 32.8% in the first half of 2025 in Europe, cross- border M&A activity in France remained very dynamic. In fact, cross-border deals led the French M&A market throughout the first nine months of 2025, while the purely domestic market experienced a sharp decline. Despite a difficult environment, inbound M&A in France remained resilient and the number of M&A announcements involving a French target increased by 10% compared to 2024 levels, totalling approxi - mately EUR29 billion in the first nine months of 2025 (the highest level of announcement in the past three years, demonstrating the continued attractiveness of the French market for international investors). This resilience is illustrated by major inbound transactions seen during the first half of 2025, such as Generali’s ecosystem awaits a rebound. Cross-border transactions
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