{"id":19991,"date":"2026-02-25T11:44:36","date_gmt":"2026-02-25T16:44:36","guid":{"rendered":"https:\/\/pmpstrategy.com\/?p=19991"},"modified":"2026-02-25T11:45:18","modified_gmt":"2026-02-25T16:45:18","slug":"why-us-mid-market-tech-software-pe-should-look-to-europe-for-alpha","status":"publish","type":"post","link":"https:\/\/pmpstrategy.com\/en\/2026\/02\/25\/why-us-mid-market-tech-software-pe-should-look-to-europe-for-alpha\/","title":{"rendered":"Why US Mid-Market Tech &amp; Software PE Should Look to Europe for Alpha\u00a0"},"content":{"rendered":"\n<p>For US private equity investors focused on tech and software, the search for alpha increasingly feels like a zero-sum game. With over 5,950 firms competing domestically, credit spreads normalizing, and distribution-to-NAV ratios hovering below historic&nbsp;averages,&nbsp;where&nbsp;should growth-oriented investors look next?&nbsp;<\/p>\n\n\n\n<p>The answer may lie across the Atlantic.&nbsp;<\/p>\n\n\n\n<p><strong>The Mid-Market Mispricing&nbsp;<\/strong>&nbsp;<\/p>\n\n\n\n<p>While US sponsors&nbsp;participated&nbsp;in one in&nbsp;four&nbsp;European PE deals in 2025, their activity reveals an intriguing&nbsp;opportunity. American capital accounted for&nbsp;50% of total European deal value but only 25% of deal volume\u2014a concentration skewed&nbsp;by activity&nbsp;toward megadeals&nbsp;(\u20ac1 billion+).&nbsp;<\/p>\n\n\n\n<p><strong>US PE share of UK\/EU deal activity (%)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"397\" height=\"448\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-10.png\" alt=\"\" class=\"wp-image-20051\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-10.png 397w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-10-266x300.png 266w\" sizes=\"auto, (max-width: 397px) 100vw, 397px\" \/><\/figure>\n\n\n\n<p>This leaves a structural arbitrage; Europe&#8217;s lower mid-market ($25-100M enterprise value) and core mid-market ($100-500M) segments&nbsp;contain&nbsp;roughly&nbsp;<strong>5x&nbsp;transaction opportunities<\/strong>&nbsp;than large-cap&nbsp;deals, yet&nbsp;attract disproportionately less US attention. More compelling still: these segments trade at&nbsp;2.5-3x&nbsp;multiple&nbsp;discounts to comparable US assets, with the lower mid-market showing the steepest gap.&nbsp;<\/p>\n\n\n\n<p><strong>European deal activity by size (#)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"384\" height=\"424\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-11.png\" alt=\"\" class=\"wp-image-20054\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-11.png 384w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-11-272x300.png 272w\" sizes=\"auto, (max-width: 384px) 100vw, 384px\" \/><\/figure>\n\n\n\n<p><strong>UK\/EU&nbsp;valuation&nbsp;discount&nbsp;vs&nbsp;US (EBITDA multiple)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"354\" height=\"436\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-12.png\" alt=\"\" class=\"wp-image-20057\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-12.png 354w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-12-244x300.png 244w\" sizes=\"auto, (max-width: 354px) 100vw, 354px\" \/><\/figure>\n\n\n\n<p>But&nbsp;here&#8217;s&nbsp;the provocation: if UK and EU mid-market software assets are mispriced, why haven&#8217;t European sponsors already captured this alpha? What systemic advantages do US investors&nbsp;possess&nbsp;that&nbsp;are limited to&nbsp;European counterparts\u2014and are those advantages transferable at scale?&nbsp;<\/p>\n\n\n\n<p><strong>Escaping the Cyclicality Trap<\/strong>&nbsp;<\/p>\n\n\n\n<p>Recent research from the Institute of Private Capital reveals an uncomfortable truth: cyclical factors explain approximately&nbsp;<strong>50% of the current slowdown in US PE distributions<\/strong>. Fund age, public market returns, credit spreads, TEV\/EBITDA compression, and M&amp;A volume collectively predict half the variance in distribution activity\u2014variables&nbsp;largely outside&nbsp;GP control.&nbsp;<\/p>\n\n\n\n<p><strong>Contributions to Buyout Distributions \/ NAV (2023-2025, annual rate)<\/strong>&nbsp;<a>&nbsp;<\/a><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"407\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-19-1024x407.png\" alt=\"\" class=\"wp-image-20083\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-19-1024x407.png 1024w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-19-300x119.png 300w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-19-768x305.png 768w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-19.png 1143w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>The 2025 Pitchbook European PE Breakdown confirms what sophisticated LPs already suspect: geographic diversification matters more in a post-2022 interest rate regime,&nbsp;which has seen&nbsp;DACH exits&nbsp;at record levels and the Nordics proved&nbsp;relatively insulated&nbsp;from trade tariff volatility.&nbsp;<\/p>\n\n\n\n<p>Yet diversification alone&nbsp;isn&#8217;t&nbsp;the full story. Consider this: if European markets genuinely offer non-correlated returns, why did sponsor-to-sponsor&nbsp;exits&nbsp;account for 54% of European exit value in 2025\u2014a market structure that theoretically should amplify, not dampen,&nbsp;with&nbsp;cyclicality? The answer reveals which investors&nbsp;possess&nbsp;the operational toolkit to extract value independent of macro conditions.&nbsp;<\/p>\n\n\n\n<p><strong>The AI Investment Arbitrage&nbsp;<\/strong>&nbsp;<\/p>\n\n\n\n<p>US PE&#8217;s impact on portfolio company technology adoption is well-documented: a 23% increase in IT budgets post-investment, 6% growth in digital job postings, and accelerated capital allocation to high-AI-potential firms following breakthrough events. Private equity has become the operating system for technology acceleration&nbsp;\u2013 and the US has been outpacing since 1995&nbsp;<\/p>\n\n\n\n<p><strong>Investment in AI-Related Physical and Digital Infrastructure (Index; 1995 = 100)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1003\" height=\"472\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-22.png\" alt=\"\" class=\"wp-image-20093\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-22.png 1003w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-22-300x141.png 300w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-22-768x361.png 768w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-22-1000x472.png 1000w\" sizes=\"auto, (max-width: 1003px) 100vw, 1003px\" \/><\/figure>\n\n\n\n<p>Meanwhile, Europe lags conspicuously. As of 2024, only 13.5% of EU enterprises deployed AI technologies compared to 40% US employee adoption rates. Cumulative US private AI investment through 2024 exceeded&nbsp;<strong>$470 billion<\/strong>&nbsp;versus&nbsp;roughly $50 billion&nbsp;in Europe\u2014a 9:1 spending ratio. Enterprise AI budgets in the US are projected to rise 75% year-over-year, moving decisively beyond pilot spend into scaled deployment.&nbsp;<\/p>\n\n\n\n<p><strong>AI technologies deployed in enterprises&nbsp;(Adoption)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"505\" height=\"364\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-20.png\" alt=\"\" class=\"wp-image-20087\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-20.png 505w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-20-300x216.png 300w\" sizes=\"auto, (max-width: 505px) 100vw, 505px\" \/><\/figure>\n\n\n\n<p><strong>AI Investment up to 2025&nbsp;($ Billions)<\/strong>&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"424\" height=\"349\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-21.png\" alt=\"\" class=\"wp-image-20090\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-21.png 424w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-21-300x247.png 300w\" sizes=\"auto, (max-width: 424px) 100vw, 424px\" \/><\/figure>\n\n\n\n<p>This creates an uncomfortable question for US investors&nbsp;focused&nbsp;on domestic opportunities&nbsp;only: are you competing to deploy AI&nbsp;<em>among<\/em>&nbsp;companies that already&nbsp;possess&nbsp;AI maturity, or capturing returns by&nbsp;<em>bringing<\/em>&nbsp;AI maturity to companies that lack it?&nbsp;<\/p>\n\n\n\n<p>The corridor strategy\u2014building platforms in UK&amp;I&nbsp;and the Nordics, scaling through DACH and Benelux, deploying selectively in CEE\u2014has proven effective precisely because it pairs US commercial excellence with European inefficiency.&nbsp;LegalTech, HealthTech,&nbsp;vertical-ERPs, and Office of the CFO software represent high-impact, low-complexity segments where US GTM acceleration and AI-enabled operational improvement&nbsp;compound&nbsp;fastest.&nbsp;<\/p>\n\n\n\n<p><strong>The Question No One&#8217;s Asking<\/strong>&nbsp;<\/p>\n\n\n\n<p>If European mid-market tech and software assets trade at discounts, offer portfolio diversification from US cyclicality, and present a&nbsp;3-5&nbsp;year&nbsp;window to capture the AI investment&nbsp;gap before Europe reaches parity\u2014why does Europe still account for less than 30% of US PE deal volume?&nbsp;<\/p>\n\n\n\n<p>Perhaps the&nbsp;better question is: how long will&nbsp;this&nbsp;arbitrage remain available?&nbsp;<\/p>\n\n\n\n<p><em>Sources:<\/em>&nbsp;<em>Pitchbook,&nbsp;Silverpeak,&nbsp;RealDeals&nbsp;Media, PMP Strategy, The Federal Reserve,&nbsp;EUKLEMS<\/em>&nbsp;<\/p>\n\n\n\n<p>Author: Ben Bugg, Associate Partner, PMP Strategy UK<\/p>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-1024x1024.png\" alt=\"\" class=\"wp-image-19812\" style=\"width:189px;height:auto\" srcset=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-1024x1024.png 1024w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-300x300.png 300w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-150x150.png 150w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-768x768.png 768w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-600x600.png 600w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-140x140.png 140w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-100x100.png 100w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-500x500.png 500w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-350x350.png 350w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-1000x1000.png 1000w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg-800x800.png 800w, https:\/\/pmpstrategy.com\/wp-content\/uploads\/Ben-Bugg.png 1080w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n<\/div>\n\n\n\n<p class=\"has-text-align-right\"><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"290\" height=\"86\" src=\"https:\/\/pmpstrategy.com\/wp-content\/uploads\/image-1.jpeg\" alt=\"\" class=\"wp-image-19365\"\/><\/figure>\n\n\n\n<p><strong>About PMP Strategy<\/strong><\/p>\n\n\n\n<p>PMP Strategy is an independent strategic management consulting firm distinguished by top management who bring C-level operational experience and combine deep sector&nbsp;expertise&nbsp;with strategic rigor to deliver tangible, lasting impact.&nbsp;<\/p>\n\n\n\n<p>For over two decades, we have served as trusted advisors to executive committees and investors across&nbsp;North America,&nbsp;Europe,&nbsp;the Middle East, and&nbsp;Africa.&nbsp; We focus on sectors where complexity and disruption create opportunity : Telecoms, Media &amp; Technology (TMT), Digital Infrastructure, Software,&nbsp; Private Equity, Financial Institutions, Transport &amp; Mobility, and Industry &amp; Energy.<\/p>\n\n\n\n<p>Our Transversal Performance practice leads complex transformation programs across functions and geographies. Our Innovation Lab\u2014dedicated to AI strategy, risk, and value creation\u2014supports clients globally.<\/p>\n\n\n\n<p>Our approach is built on partnership\u2014designing tailored strategies alongside clients and working hand in hand to drive implementation, delivering measurable results that evolve with their ambitions.<\/p>\n\n\n\n<p>Learn more at <a href=\"https:\/\/eur03.safelinks.protection.outlook.com\/?url=http%3A%2F%2Fwww.pmpstrategy.com%2F&amp;data=05%7C02%7Ckboskovic%40pmpstrategy.com%7C00d49e20c72b4d25ada908de738da982%7C389c403ba26c49d4bdd2a80b970da7d2%7C0%7C0%7C639075249444049746%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=F%2FWE65Tbvr8Y9fJBvX1TCGLWkydUn98bUS%2FHSFDnOHA%3D&amp;reserved=0\">www.pmpstrategy.com<\/a><\/p>\n\n\n\n<p><strong>Press Contact:<\/strong><br>Jennifer Campbell<br>+33 6 32 05 14 27<br><a href=\"mailto:jcampbell@pmpstrategy.com\">jcampbell@pmpstrategy.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For US private equity investors focused on tech and software, the search for alpha increasingly feels like a zero-sum game. With over 5,950 firms competing domestically, credit spreads normalizing, and&#8230;<\/p>\n","protected":false},"author":6,"featured_media":20048,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"cybocfi_hide_featured_image":"yes","footnotes":""},"categories":[114,102,103,111,101,116,115,71,74,112,75,70,1,86,119,78,96,97,82],"tags":[],"class_list":{"0":"post-19991","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-a-la-une-en-3","8":"category-a-la-une","9":"category-a-la-une-en","10":"category-a-la-une-en-2","11":"category-actu-en","12":"category-actu-en-3","13":"category-actu-en-2","14":"category-actu","15":"category-en","16":"category-en-2","17":"category-insights-en","18":"category-insights","19":"category-non-classifiee","20":"category-private-equity","21":"category-private-equity-en","22":"category-publications-en","23":"category-telecom-media-tech","24":"category-telecom-media-tech-industries-2","25":"category-tlecom-media-tech"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why US Mid-Market Tech &amp; Software PE Should Look to Europe for Alpha\u00a0 - PMP Strategy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/pmpstrategy.com\/en\/2026\/02\/25\/why-us-mid-market-tech-software-pe-should-look-to-europe-for-alpha\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why US Mid-Market Tech &amp; Software PE Should Look to Europe for Alpha\u00a0 - PMP Strategy\" \/>\n<meta property=\"og:description\" content=\"For US private equity investors focused on tech and software, the search for alpha increasingly feels like a zero-sum game. 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