The European Lincoln PMI Achieved Slow But Improved Growth in Q2 2025 as Earnings Grow Remain The Key Driver.

The European Lincoln Private Market Index (PMI), which tracks enterprise values (EVs) of private companies, grew +1.3% in Q2 2025. Better-than-expected earnings growth more than offset multiple contraction amidst continued market volatility. This marked an improvement over Q1’s +0.5% index growth but still lagged behind the average quarterly growth of +2.3% since inception.

Nick Baldwin, Managing Director in Lincoln International’s European Valuations and Opinions Group, remarked, “The steady growth in private company enterprise values underscores the stability of private market investments during uncertain times. Unlike public markets, which have experienced larger swings based on volatile multiples, private markets remain firmly anchored to fundamental growth drivers.”

By the numbers

• This quarter: Multiple contraction persisted, as evidenced by a 0.3x decline in the median multiple to 11.6x. Meanwhile, earnings growth continued to drive the index as companies worked to preempt potential tariff impacts, which led to a net modest growth rate. Looking ahead, America’s tariff war could hamper future earnings.
• Earnings: Earnings were driven by top line growth, with 55.5% of companies experiencing revenue growth compared to 49.7% experiencing EBITDA growth. Meanwhile, the magnitude of year-on-year revenue growth across all companies was 7.6% compared to 6.7% EBITDA growth, having slowed from 8.8% and 9.8%, respectively.
• UK vs. Eurozone: UK company growth in the European Lincoln PMI accelerated to +2.9%, whereas Eurozone companies grew by just +0.4%. This largely reflected industry composition, with UK sponsor-backed companies being concentrated in higher growth sectors such as business services while having limited exposure to lower growth sectors such as industrials.

By Sector

• Technology: Technology companies’ EVs fell for a second consecutive quarter, this time by -3.7%, driven by a median multiple contraction of -0.5x as public European technology companies lag the Magnificent Seven in AI development and deployment.
• Healthcare: Healthcare valuations declined for the first time in seven quarters, as year-on-year EBITDA growth slowed by 0.9 percentage points since Q1.

Between the lines

• The outperformance by the public markets reflected a short-term rebound following their declines in the wake of “Liberation Day,” with the public EV movement driven by multiple expansion. As a result, the public and private markets experienced similar growth over the first half of the year despite public market volatility.
• Tariffs and trade policy uncertainty are already squeezing industrials multiples and introduced volatility throughout Q2.
• Private market dynamics trumped macro and trade effects, with observed pricing on European private credit loans tightening by 12.5 basis points (bps) given increased fundraising and competition in the European private credit market, particularly for “A” deals.

Credit check

• Lincoln European Senior Debt Index: The index gained +2.1% in Q2. The return was 70 bps lower than what was achieved in Q1, driven by a decline in the weighted average price of all assets in the index from 99.2% to 98.9%, given broader market uncertainty.
• Cracks continued to widen, especially for already pressured companies: The covenant default rate held at the all-time high of 3.7%, with lenders choosing to allow covenant holidays in 83.8% of cases. In addition, 15.9% of companies had some form of PIK interest in their capital structure as of Q2 2025.

The bottom line: Quarter-on-quarter earnings growth continued to drive European Lincoln PMI performance; however, multiples continued to contract as uncertainty remained high despite European base rate cuts, demonstrating private market resilience.

Steven Kaplan, Neubauer Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, commented, “Although European, sponsor-backed companies continue to grow due to strong fundamentals, the elevated rates of default seen for underperforming companies may indicate weakness especially in the distressed segment of the market as uncertainty persists.”

About the Lincoln Private Market Index

The European Lincoln PMI is calculated using anonymized data on an aggregated basis by Lincoln’s Valuations & Opinions Group which has unique insights into the financial performance of thousands of portfolio investments across a variety of investment vehicles, including private equity and private debt funds.

All figures are quoted in and based on calculations in local currencies; however, Lincoln also prepares the index on a single-currency basis to account for FX impacts. Lincoln applied the same methodology to public indices to allow a like-for-like enterprise value comparison between the The Lincoln PMI, the FTSE 250 and the STOXX 600.