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| Tariff fears hinder US PE firms' forays into Europe |
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| (Chip Somodevilla/Getty Images) |
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By Madeline Shi, Sr. Private Equity Reporter
The unpredictability of Washington's tariff policies is disrupting a golden opportunity for US private equity firms—acquiring undervalued European companies.
Fresh fears about a trade war arose earlier this week following comments by President Donald Trump, who, in his pursuit of Greenland, threatened a 10% levy on Denmark and other European countries rallying behind it.
He withdrew the threat Wednesday, indicating that the "framework" of an agreement over the island had been reached.
But the flip-flopping is impacting US-based PE firms, which at the end of 2025 were actively hunting for attractively priced assets in Europe, including German industrial companies, consumer deals in Italy, pharmaceutical businesses in the Nordics and technology providers across the continent, said Christopher Sheaffer, the global vice-chair of the private equity group with law firm Reed Smith.
"We've seen people slow down the processes. They are trying to get a bit more color on where things are headed to [geopolitically]," he said, adding that these firms were pursuing cross-border transactions, as well as investments in companies that operate primarily in Europe or the UK.
Despite the announcement that tariffs are now off the table, "Liberation Day taught us that it could be short-lived," Sheaffer said.
Europe has proved a happy hunting ground for US firms grappling with sky-high valuations in their home market.
In July, KKR agreed to buy London-listed precision measurement group Spectris for £4.8 billion ($6.5 billion) following a bidding war with Advent International. The same month, Advent acquired the cleaning and household products business of London-listed Reckitt Benckiser Group in a deal worth €4.1 billion ($4.8 billion).
The valuation spread remained significant going into 2026. US equities had a mean price-to-earnings ratio of more than 22x as of Dec. 31, compared with 16x for European stocks and less than 14x for shares in UK businesses, according to JP Morgan. |
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• Capital One has agreed to acquire Brex, a corporate expense management startup, for $5.15 billion. Find out more
• BitGo made its NYSE debut, kicking off what is expected to be an active year for crypto IPOs. Read more
• EQT has agreed to buy London-based secondaries major Coller Capital for $3.2 billion in a bid to catapult the Swedish PE giant's expansion into the secondaries market. Read more
• Just out: Our Q4 valuations data for public companies in the enterprise SaaS sector. See the data |
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| The startup-on-startup M&A spree is not slowing down |
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By Jacob Robbins, Technology Reporter
Startup-to-startup M&A reached records in 2025, accounting for over a third of all acquisitions of US VC-backed companies, according to the latest PitchBook-NVCA Venture Monitor.
It's the latest sign that venture-backed companies are growing fast and using any approach to stay competitive in the age of AI.
"You're seeing a whole new set of companies that financially look like public companies, and they have a lot of cash to play with, and they look like good homes for other startups," said Madrona partner Vivek Ramaswami. The firm's portfolio company Numbers Station was acquired in May by Alation.
"These markets are getting so big and so large where, in the past, a company would just die—now it can live." |
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AI is, of course, at the wheel of this trend. Baseten, an AI inference infrastructure startup, made a December acquisition of Parsed, a reinforcement learning model developer. In October, Nuvocargo, which develops AI agents for the logistics industry, bought supply chain automation startup Mentum. And in September, AI medical search engine OpenEvidence acquired AI advertising startup Amaro.
"For every one company, there's 25 competitors. … I could definitely see a No. 5, 6, 7, 8 being acquired because they have really good talent, but they can't execute," said Ramaswami. "The most positive thing is the market shaking out between a high degree of competition—there's just more paths to success, if done the right way."
To Ramaswami and others, that would mean full acquisitions of a startup, where its entire team gets a soft landing—unlike the recent headline-making "acqui-hire" deals that typically only benefit investors and executives.
Another driver is the recognition that while the IPO environment is improving, the bar is now higher. Acquisitions can help companies become viable IPO candidates.
"That [revenue] bar was about $150 million in 2019 to 2021—it is now over $500 million," said Anders Ranum, partner at Sapphire Ventures, an investor in Alation.
"Emerging interesting categories have spawned 12 to 15 startups in short order, and many will not graduate to the next level of financing, which means selling to a private rocket ship can still be very meaningful." |
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Smart reads that caught our eye.
• Is SpaceX committed to being the first to put data centers in space? If so, it could mean an IPO sooner rather than later. [The Wall Street Journal]
• Fracking, honed in the US, is being used more and more often globally to reach hard-to-tap oil and gas reserves. [Businessweek]
• Welcome to the era of the Polymarket sharp. They make millions betting on prediction markets. [The New York Times] |
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