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Harnessing European Tailwinds with Mid-life Co-investments

  • Strategy insight

October 14, 2025 | 5 min read

Corentin du Roy

Managing Director

Gurdeep Nagra

Direct Product Specialist

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While Europe has historically provided fertile ground for private markets stakeholders familiar with regional cross border dynamics, investor sentiment for the region is on the rise in the wake of changing global trade policies.1 Despite markets across all regions displaying healthy activity and a landscape rich with private markets opportunities, EU alignment on growth initiatives across universal investing themes such as artificial intelligence, digital transformation, as well as healthcare resilience and innovation are fueling new investors to diversify their global allocations and lean into the robust performance potential of the European opportunity set.2

In today’s more constrained liquidity environment, we believe one of the best ways to tap into Europe’s private equity opportunities is through a structured and well capitalized co-investment strategy targeting high-quality mid-life deals, which are generally characterized as highly calibrated trophy assets held by GPs that are focused on transformative expansion or acquisition strategies. While these transactions can be more difficult to access, they are presenting significant opportunities for value creation that selective, value additive co-investors can access fee and carry free—a feature of co-investing that can help drive higher return potential for investors.3

Why Europe private equity now?

At the end of 2024, Europe housed ~$1.37 trillion in private equity assets (approximately one third of US private equity capital). But Europe’s share of private equity assets is slated to grow at an annual rate of 12.2% between 2023 to 2029, reaching more than $2.4 trillion by 2029.4 Despite ongoing geopolitical risks and regional conflicts in Europe, as investors digest the impact of 2025’s new trade policies and widen their investing aperture in search of greater public policy certainty and returns, Europe is increasingly a focus for those looking to capitalize on a more unified EU by targeting critical growth sectors that support regional strategic resilience and long-term competitiveness.

While the US private equity market remains strong and is clearly more mature and developed, standing almost 3x the size of Europe’s,5 European deals have generally been executed at lower EV/EBITDA multiples relative to US deals (see chart below). A significant driver behind the valuation discrepancy is sector composition. For example, the US buyout market has historically been dominated by tech-heavy and healthcare assets—sectors with attractive revenue and growth characteristics that have attracted higher multiples, while European buyout activity has historically had a higher weighting towards more volatile and lower growth sectors such as industrials, manufacturing, and automotive. As investing themes across the two regions become ubiquitous, this pricing paradigm is presenting today’s investors with attractive European buying opportunities and the potential to realize greater capital appreciation.

One way to assess the relative value across the regions is to analyze EV/EBITDA multiples of businesses trading.

Median US and Europe M&A EV/EBITDA multiples

Source: PitchBook, Q2 2025 Global M&A Report, data as of June 30, 2025. Past performance is not a reliable indicator of future results.

For private markets investors specifically, there are other tailwinds supporting this European investing thesis. Multiple interest rate cuts since June 2024 by the European Central Bank have created a more upbeat backdrop for private markets stakeholders, offering greater certainty and positive support for a continuing recovery of fundraising, deal financing, and exit markets.6 As displayed in the chart below, Europe’s corporate landscape also remains significantly more fragmented than the US, with many industries across the European continent dominated by smaller businesses that have yet to reach optimal scale. This has created opportunities for private equity sponsors to pursue buy-and-build strategies across Europe that can generate substantial value through operational improvements and market consolidation/acquisition.

Market capitalization of top three companies: US vs. Europe ($billions)*

Source: McKinsey & Company, Private capital: The key to boosting European competitiveness, dated April 1, 2025. *Notes: Company size is based on estimates of the top three companies as of 2023. The EU represents 27 members plus Norway, Switzerland, and the United Kingdom. The Consumer sector excludes retail. TLI = transport, logistics, and infrastructure. Industrials exclude automotive manufacturers.

The appeal of mid-life co-investments

There are many attractive private equity deals taking place across Europe, but we are currently seeing upside potential in co-investment strategies targeting high-quality mid-life transactions. These deals are becoming increasingly important in driving sourcing and higher returns in the European opportunity set while also providing participants the ability to proactively source these transactions and enter at an early stage where there is often more control over ticket size. Over the past decade, HarbourVest has seen the sourcing of these mid-life deals increase annually by 10-15%,7 as GPs look to hold onto their high-quality assets longer for further return realization.

Mid-life co-investment transactions are harnessing Europe’s tailwinds and creating transformative growth by catalyzing strategic M&A, providing capital for operational enhancements, or serving as an external and independent source of valuation ahead of a planned liquidity event. Blind pool risk and J-curve are also heavily mitigated as mid-life co-investment deals represent established companies that are typically highly calibrated, top performing assets currently held in the GP’s portfolio. The enhanced visibility into the current value creation strategy and performance of the current GP and its established management team help provide valuable insight into downside risks along with the potential for realizing earlier distributions.

Additionally, mid-life transactions frequently involve the lead sponsor reinvesting new money, which is key to the success of these transactions and ensures strong alignment across the lead GP and other stakeholders. However, one of the key differentiators of mid-life deals is the ability for well-networked, solutions-orientated co-investors to access this deal flow fee and carry free, a key aspect that can help investors limit performance drag in their portfolios.

Accessing the growing co-invest opportunity across Europe

As the co-investment model becomes more widely deployed in Europe, the sector is becoming more commoditized for standard syndicated deals where the sponsor pools capital from multiple external investors. Being a co-investor of scale and acting as a one-stop shop for solving a GP’s funding and underwriting constraints means very few opportunities fail to pass through a larger platform with diverse sourcing channels. However, we believe the best players do not idly sit back waiting for opportunities to present themselves. Rather, they proactively create them, and they can take several forms, including: 

  • Co-underwriting, historically one of the most prevalent solution types, especially for established players whose pattern recognition for success in attractive sectors like technology and healthcare helps augment and extend the due diligence completed by the lead sponsor.
  • Recapitalization, or replacing an existing investor (often a junior GP or LP investor—such as the founder or family group—and not the lead sponsor) that no longer wishes to hold the investment and is looking to exit, while also providing third-party independent pricing validation for new investors entering these more mature deals which often come with a shorter duration to exit.
  • Warehousing, which represents an approach where a co-investor of scale underwrites a larger check than their final position so that GPs can focus on due diligence as opposed to syndication.
  • Growth equity, a solution where an active co-investor takes a significant minority stake and shows the ability to set pricing, making it one of the most active forms of co-investing, but one that requires a partner with access to a wide sourcing ecosystem within growth and venture markets.

While sourcing buyout co-investments is difficult for most to achieve at scale, growth co-investment sourcing is even more complex given shorter execution timelines, higher churn of opportunities, and the constantly evolving technology landscape. A solutions-based approach is increasingly separating the winners from the losers with GPs looking beyond other private equity firms that will potentially compete or disrupt the governance structure or business plan that is currently being executed.

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Key takeaways

Uncertainty over the ultimate direction of global trade policies has some investors exploring diversification to a more global approach, potentially benefiting regions like Europe in search of resilience and greater certainty for co-investing. We believe that each region (the Americas, Europe, the Middle East, Africa, and Asia-Pacific) continues offering distinct opportunities for value creation and that diversifying investments across the globe remains a crucial element in constructing resilient portfolios and mitigating downside risks.

That said, for those with a keen understanding of Europe’s cross-border dynamics, regional mid-life co-investment deals are providing investors the potential to access some of Europe’s higher-quality private equity transactions without the blind pool risk of traditional buyout investing. Partnering with a co-investor of scale that is able to offer a solutions approach is crucial to helping investors access a wide funnel of high-quality deals offering the potential for enhanced risk-adjusted returns and an opportunity to optimize their private equity portfolio construction strategy.

  • While geopolitical uncertainty remains a risk across Europe based on regional conflicts, European activity is on the rise offering an opportunity-rich backdrop, often at lower valuations relative to other regions, for those with a proprietary angle into the process and cross border execution capabilities.
  • As liquidity and exits are likely to remain under pressure across the globe in 2025, mid-life co-investments are proving to be a valuable tool in a GP’s quiver for extending the value creation runway of high-conviction, high-quality assets with remaining growth opportunity.
  • With mid-life co-investment deals on the rise and GPs increasingly looking for strategic and skilled partners of scale that can bring more than capital, these co-invest opportunities are providing participating investors access to some of Europe’s top performing private equity deals and an opportunity to enhance risk-adjusted return potential of their private equity allocations.
Footnotes
  1. Preqin, European Private Markets in 2025, dated September 4, 2025.
  2. Preqin, European Private Markets in 2025, dated September 4, 2025.
  3. PitchBook, Q1 2025 Global Private Market Fundraising Report, dated June 7, 2025.
  4. Preqin, The Future of Alternatives 2029, dated September 2024.
  5. Preqin, The Future of Alternatives 2029, dated September 2024.
  6.  Preqin, European Private Markets in 2025, dated September 4, 2025.

  7. Real Deals, Mid-life co-investments take off as GPs look to share the risk, Selin Bucak, July 24, 2025.

Disclosure

Diversification does not ensure a profit or protect against a loss.

 

HarbourVest Partners, LLC (“HarbourVest”) is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes; the information should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. In addition, the information contained in this document (i) may not be relied upon by any current or prospective investor and (ii) has not been prepared for marketing purposes. In all cases, interested parties should conduct their own investigation and analysis of the any information set forth herein and consult with their own advisors. HarbourVest has not acted in any investment advisory, brokerage or similar capacity by virtue of supplying this information. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy or completeness of such information. The information is subject to change without notice and HarbourVest has no obligation to update you. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest.

 

Direct Co-Invest Investing Risks. Direct co-investments result in a GP holding a minority equity interest in portfolio companies where it does not expect to be able to protect its portfolio investments or to control or influence effectively the business or affairs of such entities. In such investments, the GP will rely on the existing management and board of directors of such companies, which could include representatives of other financial investors with whom it is not affiliated and whose interests could at times conflict with it’s interests. Such investments involve additional risks not present in investments where the GP has control, including the possibility that such other investors have financial difficulties resulting in a negative impact on such investments or take actions contrary to it’s investment objectives.

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Professional Investor Definition

“Professional Investor” under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and its subsidiary legislation) means:

(a) any recognised exchange company, recognised clearing house, recognised exchange controller or recognised investor compensation company, or any person authorised to provide automated trading services under section 95(2) of the SFO;

(b) any intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;

(c) any authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(d) any insurer authorized under the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong), or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;

(e) any scheme which-

(i) is a collective investment scheme authorised under section 104 of the SFO; or

(ii) is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,

or any person by whom any such scheme is operated;

(f) any registered scheme as defined in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong), or its constituent fund as defined in section 2 of the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485A of the Laws of Hong Kong), or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;

(g) any scheme which-

(i) is a registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong); or

(ii) is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place,

or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;

(h) any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency;

(i) except for the purposes of Schedule 5 to the SFO, any corporation which is-

(i) a wholly owned subsidiary of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(ii) a holding company which holds all the issued share capital of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong; or

(iii) any other wholly owned subsidiary of a holding company referred to in subparagraph (ii); or

(j) any person of a class which is prescribed by rules made under section 397 of the SFO for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of the SFO, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of the SFO.

The first of such classes of additional “professional investor”, under the Securities and Futures (Professional Investor) Rules (Cap. 571D of the Laws of Hong Kong), are:

(k) any trust corporation (registered under Part VIII of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) or the equivalent overseas) having been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its equivalent in any foreign currency at the relevant date (see below) or-

(i) as stated in the most recent audited financial statement prepared-

(A) in respect of the trust corporation; and

(B) within 16 months before the relevant date;

(ii) as ascertained by referring to one or more audited financial statements, each being the most recent audited financial statement, prepared-

(A) in respect of the trust or any of the trust; and

(B) within 16 months before the relevant date; or

(iii) as ascertained by referring to one or more custodian (see below) statements issued to the trust corporation-

(A) in respect of the trust or any of the trusts; and

(B) within 12 months before the relevant date;

(l) any individual, either alone or with any of his associates (the spouse or any child) on a joint account, having a portfolio (see below) of not less than HK$8 million or its equivalent in any foreign currency at the relevant date or-

(i) as stated in a certificate issued by an auditor or a certified public accountant of the individual within 12 months before the relevant date; or

(ii)  as ascertained by referring to one or more custodian statements issued to the individual (either alone or with the associate) within 12 months before the relevant date;

(m) any corporation or partnership having-

(i) a portfolio of not less than HK$8 million or its equivalent in any foreign currency; or

(ii) total assets of not less than HK$40 million or its equivalent in any foreign currency, at the relevant date, or as ascertained by referring to-

(iii) the most recent audited financial statement prepared-

(A) in respect of the corporation or partnership (as the case may be); and

(B) within 16 months before the relevant date; or

(iv) one or more custodian statements issued to the corporation or partnership (as the case may be) within 12 months before the relevant date; and

(n) any corporation the sole business of which is to hold investments and which at the relevant date is wholly owned by any one or more of the following persons-

(i) a trust corporation that falls within the description in paragraph (k);

(ii) an individual who, either alone or with any of his or her associates on a joint account, falls within the description in paragraph (k);

(iii) a corporation that falls within the description in paragraph (m);

(iv) a partnership that falls within the description in paragraph (m).

For the purposes of paragraphs (k) to (n) above:

  • “relevant date” means the date on which the advertisement, invitation or document (made in respect of securities or structured products or interests in any collective investment scheme, which is intended to be disposed of only to professional investors), is issued, or possessed for the purposes of issue;
  • “custodian” means (i) a corporation whose principal business is to act as a securities custodian, or (ii) an authorised financial institution under the Banking Ordinance (Cap. 155 of the Laws of Hong Kong); an overseas bank; a corporation licensed under the SFO; or an overseas financial intermediary, whose business includes acting as a custodian; and
  • “portfolio” means a portfolio comprising any of the following (i) securities; (ii) certificates of deposit issued by an authorised financial institution under the Banking Ordinance (Cap, 155 of the Laws of Hong Kong) or an overseas bank; and (iii) except for trust corporations, cash held by a custodian.

Institutional Investor / Accredited Investor Definition

An institutional investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(a) the Singapore Government;

(b) a statutory board as may be prescribed by regulations made under section 341 of the SFA, as prescribed in the Second Schedule of the Securities and Futures (Classes of Investors) Regulations 2018;

(c) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is —

(i) to manage its own funds;

(ii) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or

(iii) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country;

(d) any entity —

(i) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and

(ii) whose funds are managed by an entity mentioned in sub‑paragraph (c);

(e) a bank that is licensed under the Banking Act 1970;

(f) a merchant bank that is licensed under the Banking Act 1970;

(g) a finance company that is licensed under the Finance Companies Act 1967;

(h) a company or co‑operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore;

(i) a company licensed under the Trust Companies Act 2005;

(j) a holder of a capital markets services licence;

(k) an approved exchange;

(l) a recognised market operator;

(m) an approved clearing house;

(n) a recognised clearing house;

(o) a licensed trade repository;

(p) a licensed foreign trade repository;

(q) an approved holding company;

(r) a Depository as defined in section 81SF of the SFA;

(s) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere;

(t) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;

(u) a designated market‑maker as defined in paragraph 1 of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;

(v) a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43D(2)(a) or 43E(2)(a) of the Income Tax Act 1947;

(w) a person who undertakes fund management activity (whether in Singapore or elsewhere) on behalf of not more than 30 qualified investors;

(x) a Service Company (as defined in regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations) which carries on business as an agent of a member of Lloyd’s;

(y) a corporation the entire share capital of which is owned by an institutional investor or by persons all of whom are institutional investors;

(z) a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005) in which each partner is an institutional investor.

An accredited investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(i)  an individual —

(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —

(BA) a deposit as defined in section 4B of the Banking Act 1970;

(BB) an investment product as defined in section 2(1) of the Financial Advisers Act 2001; or

(BC) any other asset as may be prescribed by regulations made under section 341; or

(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(ii)  a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —

(A) the most recent audited balance sheet of the corporation; or

(B) where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date must be within the preceding 12 months;

(iii) A trustee of a trust which all the beneficiaries are accredited investors; or

(iv) A trustee of a trust which the subject matter exceeds S$10 million; or

(v) An entity (other than a corporation) with net assets exceeding S$10 million (or its equivalent in a foreign currency) in value. “Entity” includes an unincorporated association, a partnership and the government of any state, but does not include a trust; or

(vi) A partnership (other than a limited liability partnership) in which every partner is an accredited investor; or

(vii) A corporation which the entire share capital is owned by one or more persons, all of whom are accredited investors.

Continuation solutions encompass a host of transaction types in which a GP secures interim liquidity and/or additional primary capital for their LPs in a strongly performing asset, or set of assets, that the GP will continue to own and control. Specifically, they include continuation funds, new funds created by GPs for the purpose of acquiring the asset(s) that continue to be managed by the same GP and capitalized by one or several secondary buyers, or equity recapitalizations involving a direct equity or structured equity investment into a portfolio company. These transactions can also include a parallel investment from the GP’s latest fund into that same pool of assets (a “cross-fund trade”).