Buy & Build Capital @BuyandBuildCap

@joecarlsonshow x.com/eigengenesis/s…

eigenesis (misaligned) @eigengenesis

5 days ago

the only moat left is the love of the game

75 2K 9K 263K 1K

The record median fund size is a sign of a contracting market, not a healthy one, and Europe’s growth problem is structural. But for disciplined buyers of cash-generative businesses, there are lower multiples, less competition, and a working exit market in London. Cheap for a reason. Sometimes cheap enough. Source: PitchBook Q3 2026 Europe PE Breakdown

If you’re buying cash flow instead of growth, Europe is getting interesting. Entry valuations have reset. Median EV/EBITDA has come down from 10.5x (2021) to 8.9x YTD, the second-lowest of the decade. That’s a headwind for anyone selling 2021-vintage assets and a tailwind for 2026-27 vintages. The activity is in mid-market platforms and add-ons: Add-ons: 57.4% of deal count (decade high) €100-500M deals: 43.9% of deal value (decade high) These deals are small enough to finance through direct lending and club deals, so sponsors don’t have to wait out the syndicated market. Such add-ons can be funded from a platform’s existing credit lines and skip a full auction, which is exactly what you want while the ECB is still hiking. The UK is the liquidity outlier. The BoE hasn’t followed the ECB on rates, and UK & Ireland took 42.1% of Q3 deal value. UK take-privates hit €30.3B YTD, including 8 of Q3’s 10. PISCES even let Wayve run an $85M employee tender without an IPO.

European PE median fund size just hit a record €360M, up ~31% y/y and roughly 2x in three years. Sounds like a positive, right? It isn’t. The median went up because the bottom fell out: Capital raised: €151.8B (2024) → €84.8B (2025) → €65.9B YTD Fund count: 348 (2023) → 174 (2025) → 99 YTD When small funds can’t close, the median rises by default. First-time managers raised just €1.5B across 7 funds YTD, a series low, while established firms took ~90% of all capital. With distributions under 20% of NAV (vs. a 27% 10-year average), cash-short LPs are re-upping with the GPs they know, and not betting on new managers. Deals are following capital down. Q3 deal value fell 10.9% q/q and sits roughly a quarter below Q3'25. Sponsors struck ~2,250 deals against 435 exits, buying ~6x faster than they’re selling into a record backlog of ~15,000 portfolio companies. (per PitchBook) European PE isn’t just consolidating. It’s shrinking, and the record fund size is hiding it. Underneath is a continent that’s stopped building and is now structurally reliant on American capital. 🧵

keyboard_arrow_left Previous keyboard_arrow_right Next

🔗cdn.mc-weblink.sg-mktg.com/weblink/MTc5MT…

Two years ago, software was the sector buyers paid up for and industrials were the value play. Not anymore. (data via PitchBook) Since 2024, median IT deal multiples are down 3.7 turns, while B2B manufacturing, construction, and professional services are +1.2 turns. Energy deal activity has already passed all of 2025 with one quarter to go. The money is following the AI "picks and shovels" buildout into concrete, copper and power, and away from the code layer AI is supposed to disrupt. Two things I’m watching: 1) Not every discounted software business deserves it. The ones with proprietary data and workflows that are painful to rip out look mispriced next to the ones that just bill per seat. 2) Buying the physical side of AI at 1.2 turns richer isn’t free either. If capex cools, those multiples go back to being cyclical. Is the market right to value code below concrete, or is this the next overcorrection?

🔗axios.com/newsletters/ax…

42 new decacorns so far in 2026, already a record year (chart via Axios). The growth is real. Capital is chasing AI and a handful of category leaders faster than at any point since 2021. But headlines like this tend to leave out inflation. A $10bn valuation today isn’t the same milestone it was in 2019, let alone in 1925. Is the record emergence of decacorns only a nominal feat in an environment of peak pricing and “numbers go up” datapoints? The more useful comparison: 2021 minted 34 decacorns on zero rates, and prices are up meaningfully since. Adjusted for inflation, 2026’s "record" looks a lot less record-breaking. The other era that minted big valuations this fast was Dot Com (1999–2000). The question is whether this cohort looks more like the survivors of that run, or the rest of it. Curious where people land. Is this era’s value creation actually bigger, or are we grading on a curve?

🔗semafor.com/article/10/08/…

"PE ruins everything" is a recent favorite take of the online community. While I don't totally disagree, Coca-Cola's failure with Costa Coffee is a good case study on how strategic buyers can do the ruining just fine on their own. Coke bought Costa from Whitbread in 2018 for $5.1bn with a thesis that a global beverage giant plus a UK coffee chain would build a platform for hot and "ready-to" drinks. Now 7 years later: - Costa lost nearly £20m across 2023–24 before returning to a ~£20m operating profit in 2025 - Coke ran a sale process in late 2025 and pulled it in early 2026 after PE bids came in light - Now it’s reportedly testing the market again, after at least one strategic buyer passed on valuation and fit To be fair, the backdrop hasn't helped: a UK economy with almost no growth, years of inflation hitting both costs and consumer wallets, and a coffee market that's only gotten more crowded. But that's the point. When a PE-backed brand stalls, the leverage and the sponsor get the blame. When a strategic buyer's "synergy" daydream backfires, it gets called a tough macro environment. How do strategic deals generally hold up against the same scrutiny PE receives? And which deals have actually destroyed the most value?