FRANCE Trends and Developments Contributed by: Nicolas Karmin and Pauline Le Faou, Sullivan & Cromwell LLP
slowdown has been driven by several factors in addi - tion to the macroeconomic and political uncertainties described in sections above. On the one hand, rea - sonably priced private targets have remained scarce, with sellers’ valuation expectations still remaining pretty high over the past period; on the other hand, significant financing costs have limited the valuation multiple sponsors can afford. The valuation gap has resulted in longer and more complex negotiations as part of the transactions; in particular, legal mechanisms permitting reconciliation of sellers’ and purchasers’ views (earn-out provisions, price adjustments, vendor loans, etc) are seen, more than ever, as central aspects of the deal parameters and have given rise to lengthy discussions as part of the deals process. France has returned to the spotlight with recent high- profile transactions. The acquisition of majority stakes in Opella by CD&R and in Neoen by Brookfield and Temasek for EUR8 billion and EUR3.25 billion respec - tively in 2024 signal a light renewed appetite for large transactions. However, echoing trends observed across Europe, the number of jumbo deals (valued at EUR1 billion or more) has recently declined in France’s PE market. At the same time, add-on transactions have steadily increased, rising from 44.7% of total deal volume in 2023 to 48.7% by the end of 2024. This trend is expected to continue in 2025, as smaller add-on acquisitions drive value creation by integrat - ing complementary businesses into existing portfolio platforms. Another notable trend in the French PE market in recent months has been the sharp rise in both the volume and value of take-private transactions. This surge in 2024 has been largely driven by the avail - ability of high-quality listed assets at attractive valua - tions relative to comparable private targets, creating compelling opportunities for PE sponsors. Consolidation in the PE industry has also been an emerging trend in France over the past few years, resulting in a rise of “GP stake” transactions. Certain funds are even dedicated specifically to this type of transactions. Such trend is supported by a variety of factors, including a generational one: many PE firms
need to find liquidity to transition the capital between two generations of partners. It is also to be noted that ESG criteria are becom - ing increasingly important components of investment policies, and compliance with ESG regulatory require - ments a great challenge for PE sponsors, although the Omnibus package aims in particular at limiting the application scope of the Corporate Sustainability Reporting Directive. Limited US investor participation in French PE deals Even if certain analysts consider that the French mar - ket is affected by heavier regulations and higher tax than in other European jurisdictions, non-European sponsors continue to see the French market as a strong PE hub in Europe, consistently second after the UK in terms of market size. However, while French PE deals involving US inves - tors grew year-on-year in 2024, their share remains low compared to other European countries. Over the past five years, US participation in France’s deal val - ue averaged 23.5%, significantly lower than the UK (42.8%), Germany (38%) and Italy (36%). In terms of the number of deals, French PE actors remain in a leading position in the French market, with Bpifrance, BNP Paribas Développement and Siparex Group being referenced as the top three PE investors over the period from 2020 to Q2 2025. A prolonged decline in the traditional exit activity Since 2021, France’s PE exit activity has been steadily declining, with exit values dropping significantly from circa EUR57.6 billion in 2021 to circa EUR41.1 billion in 2023, and further falling to circa EUR33.9 billion in 2024. In H1 2025, exit transaction values decreased by circa 48% compared to H1 2024, reaching the lowest level for a semester for at least the past five years. Moreover, France’s PE exit market has under - performed relative to other comparable European jurisdictions such as the UK and Germany. The lack of public listing plays a role in the exit short - age in France; in fact, there was not a single public listing from a PE-backed company in 2023 and only
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