Private equity firms are now contributing almost 40% of equity to deals as the lack of leverage forces funds to increase their commitment to deals.
According the final figures of 2008 from the European Private Equity & Venture Capital Association (EVCA) and compiled by PEREP-Analytics, mega-deals now see an average equity contribution of 32%, up from the 20% seen in the 2006-07 boom years.
The absence of large and mega deals in the buyouts market has resulted in total investment falling by 28% to €54bn in 2008. Large and mega buyouts fell by around 40% both in number and value.
The pinch has also been felt further down the chain as the total number of small and mid-market deals fell in value by 30%, and by number by a fifth.
However, early-stage venture capital has been undeterred by the economic downturn, with a 15% increase in the number and 7% in value of seed-stage and start-up companies receiving backing.
Venture also proved resilient in terms of fund raising where 44 funds closed in 2008 compared with 35 in 2007, with a slight fall in total value from €3.1bn to €2.9bn.
Overall, fund raising was in line with 2007 figures, with European private equity funds raising €79bn in 2008 compared with €81bn the previous year, making 2008 the third best year for both investments made and for funds raised. Other than 2007, it is beaten only by 2006, which saw €112bn on capital raised and €71bn invested (€74bn was invested in 2007).
Exit levels reached a four year low, with European private equity firms selling more than 2,000 companies at €13.9bn at cost. This is marginally higher than 2003 and half of the number in 2007.