• Valuations & Opinions Group update and outlook
• Capital Advisory Group update and outlook
• M&A update and outlook

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The post Webinar | Q1 2026 European Private Market Insights appeared first on Lincoln International LLC.

European Lincoln PMI Declines in Q1 But Outperforms Public Markets Amid The Software-Driven Sell-Off

The European Lincoln Private Market Index (PMI) is the only index that tracks changes in the enterprise value (EV) of Europe’s privately held companies. Starting at a value of 10,000 as of December 31, 2020, the PMI grew to 15,350, though declined 1.3% in Q1 2026. This marked the first quarterly decline since inception, as multiple contraction more than offset earnings growth following the recent public market software sell-off.

About the European Lincoln PMI

The European Lincoln PMI is a first-of-its-kind index measuring changes in the EVs of European private companies over time and a barometer of private company performance. The PMI enables private equity firms and other investors to benchmark how private company investments are performing against peers and how this performance compares to the STOXX 600 and FTSE 250 public indices.

To review the results of an independent study on the quality and breadth of Lincoln’s private market database, click here.

IMPORTANT DISCLOSURE

The post Q1 2026 European Lincoln Private Market Index™ appeared first on Lincoln International LLC.

Lincoln International, a global investment banking advisory firm, announced today that the European Lincoln Private Market Index (PMI), the only index that tracks enterprise values (EV) of Europe’s privately held companies, declined 1.3% in Q1 2026. This marked the first quarterly decline since inception, as multiple contraction more than offset earnings growth. The contraction in Q1 was primarily driven by decreases in the EVs of technology companies following the accelerated pace of AI development and recent public market software sell-off. Technology companies constituted 15% of the European Lincoln PMI but contributed to over 50% of the overall decline this quarter.

Despite the Lincoln PMI’s decrease, private markets continued to demonstrate relative resilience in comparison to the public markets. The FTSE 250 and STOXX 600 EVs declined 5.0% and 2.9%, respectively. As with previous quarters, the return was almost entirely attributed to the impact of changes in EV multiples, which more than offset the positive underlying fundamental performance. Over the last twelve months, the Lincoln PMI’s return of 3.1% beat that of the FTSE 250’s of 2.4%, but it trailed the STOXX 600’s return of 6.1%.

“While private company enterprise values have historically been driven by fundamental performance and near-term expectations of growth, Q1 marked a deviation from that trend for software companies,” noted Steve Kaplan, Neubauer Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, who assists and advises Lincoln on the PMI. “Within the European Lincoln PMI, European software company operating performance, in fact, was positive in Q1. The decline in software valuations was entirely due to lower multiples for such businesses, reflecting market participants’ views of longer-term expectations around AI driven disruption.”

Quarter Highlights:

• This quarter: Multiples had a negative impact, with the median EV multiple for the constituents of the PMI declining from 11.7x in Q4 to 11.5x in Q1. Notably, for technology companies, the median EV multiple declined approximately 1.0x in Q1.
• Earnings: Whilst earnings growth has underpinned the index’s increase since inception, it was not enough to offset the extent of multiple contraction in Q1. However, earnings continue to grow at a steady rate. Across all industries, the percentage of companies reporting year-over-year (YoY) LTM revenue growth declined from 76.4% to 71.1%, and the percentage of companies reporting YoY LTM EBITDA growth declined from 67.4% to 62.8%. Furthermore, the rate of revenue growth was flat at 7.5%, while the rate of average EBITDA growth slowed from 7.1% to 5.8%.
• UK vs. Eurozone: UK company EVs increased 0.7%, outperforming the 1.6% decline in Eurozone company EVs. The Eurozone had greater exposure to declining sectors, such as technology and industrials, and hence was more impacted by multiple compression.
• Sector Highlights:
  • Technology: Technology EVs, which represented 15% of the European Lincoln PMI, declined 6.4% for the quarter, driven by the global software sell-off. Software EVs, specifically, declined 8.3% within the PMI, driven entirely by multiple contraction. There were also declines in the digital media subsector. On the credit side, across European software loans valued by Lincoln in Q1 2026, the average fair value declined by 1.0% of par. There was a clear link between higher LTV deals and a more material trade off in loan prices, with the spread of software loans with an LTV above 45% increasing by 0.49% on average.
  • Consumer: Consumer was the only sector to grow in Q1, increasing +3.3%, rebounding from the decline in Q4. The sector saw strong average earnings growth across all subsectors, but most notably in lifestyle and leisure.
  • Industrials: Industrial EVs declined by 1.8% in Q1, reflecting concerns around the Iran conflict’s impact on energy costs and supply chains. While underlying performance remained resilient, any sustained disruption could translate into more pronounced operational pressures and weaker earnings in coming quarters.
  • Business Services: Business services declined by 1.3%, marking its first decline since early 2023, as AI-related disruption spread into subsectors such as insurance, which is particularly exposed to AI-related risks. Other subsectors experiencing average earnings decline were marketing and information services, while the majority of subsectors experienced average multiple decline.
• Small and Large Businesses: In Q1, small companies (i.e. EBITDA < €30 million) outperformed large companies as stronger earnings growth offset multiple contraction. The impact of multiple contraction was elevated in large companies given the largest constituents of the PMI were particularly concentrated amongst software companies with AI-related risks. The three largest companies within the PMI were software companies and had an average multiple decline of 8.6%.

Deep Dive into Software

Consistent with all the public headlines, the decline in EVs this quarter was primarily driven by weakness in the technology sector, particularly software companies. The results should come as no surprise given the recent global sell-off of public software equities and credits, and fears of AI-disruption to software and Software as a Service (SaaS) companies. AI’s capabilities, investment and adoption have grown significantly and far more quickly than many market participants expected. However, the decline in the software subsector was specifically driven by the impact of multiple contraction rather than earnings, which was positive within the European Lincoln PMI in Q1. While macroeconomic factors such as AI disruption may take time to be reflected in financial results, private companies’ earnings growth overall remained positive in Q1, albeit the rate of growth continued to slow slightly.

Credit Check

Whilst headline metrics appeared positive, some signs of weakness remain. Covenant default rates declined from 1.8% to 1.5%, but this was influenced by the amending or restructuring of several breaches in the prior quarter rather than a fundamental improvement in borrower health, and there were nine new companies that breached covenants in the quarter. The overall proportion of companies utilizing PIK interest declined from 17.1% to 16.2%. However, the percentage of companies that paid cash interest at close before implementing PIK interest (i.e., bad PIK) increased from 7.3% to 7.8%, indicating rising stress among more challenged private companies. For those companies with “bad PIK,” LTV increased 28.5% since transaction close.

Financing Conditions

European private credit markets remain active, with deal flow continuing despite ongoing uncertainty on AI disruption, economic policy shifts and geopolitical uncertainty. Competitive dynamics are still supporting borrower-friendly terms, although lenders are becoming more selective, particularly in software, where underwriting standards have tightened. While spreads remain stable, leverage levels have edged lower as lenders apply greater scrutiny and higher base rates constrain debt capacity. Reflecting this, Lincoln has maintained its spread guidance from March 2026 but reduced the high end of its leverage guidance by 0.25x across unitranche, second lien and subordinated debt structures for all size categories.

The Bottom Line

While private markets have remained resilient, Q1 reflected a shift toward multiple-driven valuation declines offsetting earnings growth, albeit slowing growth, in addition to some persistent credit stress. Together, these trends point to a more cautious market backdrop.
Nick Baldwin, Managing Director in Lincoln International’s European Valuations & Opinions Group, commented, “Q1 marked a notable shift, with the decline in the European Lincoln PMI largely driven by the software-led sell-off and changing market expectations around AI. That said, underlying fundamentals remain robust, with the European Lincoln PMI still supported by positive earnings growth. What we are seeing is a growing divergence, where strong businesses continue to perform, but valuations are adjusting to reflect longer-term uncertainty. As a result, investors are becoming more selective, particularly in sectors most exposed to disruption.”

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Key findings

Closing statements are increasingly contested

NWC adjustments are among the most frequent sources of post-close M&A disputes. Approximately 63% of survey respondents reported experiencing disputes at least occasionally (i.e., one occurrence every one to two years), and approximately 25% indicated they are involved in disputes multiple times per year. These figures reflect that post-close M&A disputes remain common in finalizing purchase price adjustments.

Under most M&A purchase agreements, the buyer prepares the closing statement, and the seller has a defined period to review and object. This structure gives the buyer a first-mover advantage: the initial positions frame what the seller must evaluate and, where appropriate, challenge.

The more instructive finding is not the frequency of disputes but the dynamics driving them. Survey results indicate that approximately 60% of respondents believe buyers incorporate some degree of a “value-maximization” approach into closing statement preparation, with a smaller subset (8%) reporting that this is their primary objective. This can create tension with sellers who may focus more on consistency with historical accounting treatments.

A value-maximization approach does not mean that the positions taken are improper. Generally Accepted Accounting Principles (GAAP) and the accounting provisions of the purchase agreement often allow for judgment and estimates.

For example, at closing, a buyer may record higher inventory reserves than the target company historically applied, particularly where historical reserve calculations were not well documented. A seller may, in its judgment, have a different view on inventory reserves required at closing based on the same facts and circumstances as considered by the buyer, and both views could reasonably be applied under GAAP. When the closing statement balances reflect different assumptions than those applied historically, the effect on net working capital can be substantial.

Building on our discussion in a prior article, How Sellers are Narrowing the Gap with Buyers in M&A Post-Close Working Capital Adjustments, Sellers appear to be responding to buyers’ value-maximization approach with increased closing statement scrutiny. Among respondents with sell-side experience, approximately 64% reported increased scrutiny of buyer-prepared closing statements, including approximately 25% who described that increase as significant. Increased seller scrutiny typically translates to more detailed reviews of underlying schedules, more requests for explanations of specific assumptions and more formal objections where the buyer’s positions appear inconsistent with the purchase agreement or the target’s historical accounting practices.

This tension between buyers’ value-maximization approach and sellers’ increased scrutiny is reflected in dispute activity. Respondents reporting higher levels of seller scrutiny were more likely to escalate matters to a neutral accountant. Among respondents who reported significantly increased sell-side closing statement scrutiny, approximately 47% reported escalation at least occasionally. That rate drops to approximately 31% among respondents reporting modest increases in sellers’ scrutiny, and to approximately 15% among those reporting no meaningful change in sellers’ approach. Survey results reflect a clear and consistent pattern: increased scrutiny is associated with increased dispute escalation.

A value-maximization approach, combined with increased scrutiny, places greater pressure on buyer and seller positions to be supportable under both the purchase agreement and applicable accounting frameworks, particularly where those frameworks leave room for interpretation. Outcomes in M&A disputes depend on how effectively positions are structured, documented and defended.

Experience appears to influence RWI claim outcomes

RWI continues to play a significant role in M&A transactions, including in the resolution of financial or accounting-related claims. Respondents reported mixed recovery outcomes in RWI claims, with results varying meaningfully based on a claimant’s experience with RWI claims. This pattern suggests that execution, not just the strength of the breach, drives recoveries.

One-third of respondents reported pursuing accounting-related RWI claims at least once. Claim denials appear to be uncommon, at approximately 4%, and most respondents reported at least limited recoveries.

Differences in outcomes appear to be associated with experience. Among respondents with five or more RWI claims, approximately 70% reported strong recoveries, compared to approximately 31% of those with one to five claims. The difference in outcomes between more- and less-experienced users is notable and suggests that how claims are developed and presented can materially affect recovery.

Financial or accounting-related RWI claims often require detailed analysis of both the policy language and the underlying accounting issues. For example, a claim may arise where the purchase agreement includes a representation that the target’s financial statements were prepared in accordance with GAAP, but post-closing analysis identifies that certain accruals were understated. This understatement, if corrected, could reduce EBITDA and, in some cases, result in a diminution of value claim (i.e., the purchase price paid by the buyer would have been lower as a result of the breach).

Evaluating the claim requires determining whether that accounting treatment constitutes a breach of the representation as covered under the policy, including whether the claim falls within the scope of covered representations and is not limited by policy exclusions, and whether the issues translate into a recoverable loss. This typically involves reconstructing the appropriate accounting treatment, assessing consistency with historical practices and GAAP and quantifying the resulting impact on financial metrics relevant to the transaction (e.g., EBITDA and the impact on purchase price).

Insurers appear willing to pay valid RWI claims, but recovery outcomes are influenced by how effectively claims are defined, quantified and supported. The strength of the claim file (i.e., how clearly the breach is established, how rigorously the loss is quantified and how completely the analysis is documented) can be an important factor in distinguishing a strong recovery from a partial one.

Neutral Accountants are infrequently used but viewed as effective

While post-close disputes are common, most are resolved prior to involvement of a neutral accountant. Survey results indicate that approximately 24% of respondents with dispute experience escalate those disputes to a neutral accountant at least occasionally (i.e., once every two years), with higher rates observed among respondents who are more frequently involved in disputes. Issues escalated to a neutral accountant often involve technical accounting areas, such as reserve methodologies or revenue recognition, or the application of vague accounting language in the purchase agreement. For a more detailed discussion of the post-close purchase price adjustment process, from closing through neutral accountant escalation, see our prior article, Working Capital Adjustments and Tips to Mitigate M&A Disputes.

Among respondents with experience in the neutral accountant process, approximately 85% rated it to be either somewhat or very effective. Notably, this perception did not vary meaningfully by industry, business type or frequency of dispute involvement. Participants with limited exposure to the neutral accountant process rated the neutral accountant’s effectiveness similarly to those who engage with the process more frequently. The level of familiarity with the process does not appear to diminish confidence in it.

The consistency of this finding is significant. The neutral accountant process is sometimes characterized as a costly and unpredictable last resort. Survey results suggest that practitioners across experience levels view it as a functional and workable resolution mechanism.

Differences between Target and Closing NWC are often operational, not accounting-driven

Differences between target and closing NWC are common in post-close purchase price adjustments. Approximately 41% of survey respondents cited business volatility and seasonality as the primary source of those differences. This finding is consistent with our discussion in a prior article, Bridging the Gap Between Target and Closing Net Working Capital in M&A Deals and reinforces that target to closing differences do not necessarily reflect accounting disagreements. They often reflect underlying business performance.

Seasonal fluctuations in receivables, inventory or accrued expenses can produce closing balances that diverge from the historical periods used to set the target, even where the same accounting methodology is applied consistently at closing. A higher receivables balance at closing, for example, may reflect increased sales activity near period end rather than any change in accounting treatment. A lower inventory balance may reflect seasonal drawdown rather than an improper reserve. In either case, the adjustment can still generate tension in the post-close process, particularly when the resulting purchase price change is material or differs from what either party expected at signing.

This reinforces the importance of how parties establish NWC targets during deal negotiation and how the purchase agreement defines net working capital. Where targets are based on periods that are not representative of normalized operating conditions, or the purchase agreement’s definition of NWC is ambiguous, the post-close process may produce unexpected adjustment amounts and potential disagreement between buyers and sellers.

Survey respondents were also asked to identify which macroeconomic factor they expect to have the greatest effect on NWC and earnout definitions in purchase agreements over the next two years. The results were notably dispersed. Tariffs and trade policy, supply chain disruptions and inflation each received meaningful shares of responses, but no single factor commanded consensus, and a significant portion of respondents indicated that none of the listed factors would be the primary driver.

Why it Matters – Looking Ahead with Lincoln

The survey results offer a clear picture of the current post-close M&A dispute environment. NWC adjustment disputes remain frequent, closing statements are being prepared and reviewed with greater scrutiny and formal escalation to a neutral accountant represents a relatively small subset of all disputes. RWI claims provide a meaningful avenue for recovery, but outcomes reflect the quality of claim preparation as much as the merits of the underlying breach. The neutral accountant process, for its part, is viewed as effective by practitioners across experience levels.

Across each of these areas, the quality of purchase agreement drafting, the clarity of the accounting definitions and the rigor of the analysis are what ultimately shapes outcomes.

Lincoln International’s disputes team works with buyers, sellers and insureds on post-close purchase price adjustment disputes, neutral accountant processes and RWI claims. Our practice combines forensic accounting experience with a detailed understanding of M&A transaction mechanics and the resolution processes that govern them.

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Lincoln International’s initial public offering (IPO) on the New York Stock Exchange was one of the largest investment bank listings in decades. After ringing the opening bell, CEO Rob Brown joined CNBC’s “Squawk on the Street” to discuss the IPO, demand drivers in the private capital markets and more.

Watch the segment.

The post CNBC | Lincoln International CEO on Firm’s Edge over Bigger Banks appeared first on Lincoln International LLC.

Lincoln’s professionals discussed key topics and trends, including:

• Why closing statements are increasingly contested
• How buyer value-maximization strategies can increase seller scrutiny
• How experience and preparation may influence RWI claim outcomes
• Why neutral accountants are infrequently used but generally viewed as effective
• Why differences between target and closing net working capital are often driven by operational factors rather than accounting methodology changes

Click here to download the presentation.

The post Webinar | Market Insights: A Survey on M&A Disputes appeared first on Lincoln International LLC.

Technical building equipment is increasingly crucial for sustainable and strategic initiatives in the real estate sector. The decarbonization of Europe’s building stock is driving demand and investments in the sector, creating opportunities for sponsors. Managing Directors Juan Carlos Montoya and Sedat Irdelp shared their insights in the Börsen-Zeitung.

Read the article

The post Börsen-Zeitung | Technical Building Equipment Industry on the Rise appeared first on Lincoln International LLC.

The post Food & Beverage Quarterly Review Q1 2026 appeared first on Lincoln International LLC.

Consumers continue to prioritize health, transparency, convenience and authenticity, while food companies face increasing pressure to navigate inflation, sustainability requirements and geopolitical complexity. Discussions at TUTTOFOOD reflected a sector that is increasingly international, operationally sophisticated and strategically disciplined, while still maintaining the entrepreneurial culture and long-term vision that continue to distinguish many family-owned Italian businesses.

Against this backdrop, Italian food companies remain exceptionally well-positioned. Several relevant global themes that consistently emerged in discussions are analyzed in the article below.

The post TUTTOFOOD Milan 2026: Innovation, International Expansion and Operational Excellence Drive Italian Food appeared first on Lincoln International LLC.