The structure and integration of the European buyout industry

The European private equity market has expanded meaningfully over the past few decades, with leveraged buyouts having averaged more than 50 billion euros per year in 2010–2016. This paper examines investment flows within Europe, as well as between Europe and the rest of the world at two levels: commitments from investors to private equity funds and acquisitions of portfolio companies by these funds. Although standard indicators of market integration are not available, these flows suggest that the European private equity market is significantly integrated both regionally and globally, with the United Kingdom serving as Europe’s major hub. At the same time, the paper finds that financial intermediation in the European buyout industry has remained relatively fragmented, which has important implications for constructing institutional investors’ portfolios.