2025: Redefining Value Creation in Industrial Private Equity
Originally published by the French media Private Equity Magazine, this article by Andreas Dörken, Managing Partner at EFESO Management Consultants, explores how 2025 marks a pivotal shift for industrial private equity. In a landscape shaped by geopolitical uncertainty, regulatory complexity, and evolving investment dynamics, the piece highlights the emerging strategies redefining value creation and long-term resilience in the sector.
The year 2024 marked a multidimensional rupture in the private equity cycle, particularly within industrial sectors. Following a slowdown in deal activity—driven by rising interest rates, high valuations, and a climate of geopolitical and regulatory uncertainty—the market is now showing tangible signs of recovery. The first half of 2025 confirms a rebound in activity, centered on medium-sized transactions that are more defensive, less risky, and better adapted to a still-volatile environment.
This recovery appears to signal a more structural transformation, characterized by deeper, long-term changes in the dynamics of industry investment.
Toward a Redefinition of the Scope of Operations
The first major trend relates to the very nature of transactions. Several funds have adjusted their strategies by targeting asset-light companies, often operating in sectors such as industrial services, logistics, pharmaceuticals, and healthcare, or specialized subcontracting. These types of businesses typically require less capital investment, are easier to restructure, and offer greater long-term liquidity. This tactical shift addresses an immediate need for security and more predictable returns. However, it remains a short-term response.
More fundamentally, the very structure of industrial asset offerings is evolving. There is a growing wave of divestitures of non-strategic activities by major industrial groups—a reflection of their efforts to refocus strategies and optimize industrial portfolios. These spin-offs present attractive opportunities for investors, who can acquire entities with strong value-creation potential—provided they possess the industrial execution capabilities to unlock it.
A New Timeline for Value Creation
The second major change concerns the value creation model itself. The sector’s historical standards, based on a four- to five-year holding cycle, no longer apply. Investment horizons are now extending beyond seven years, driven by a structural decline in exit multiples and the growing capital requirements needed to transform industrial companies. Creating value today demands more sustained, long-term efforts and deeper industrial expertise.
This context is forcing investors to rethink their operational strategies. It is no longer just a question of rapidly optimising costs or accelerating growth in buoyant markets. We need to build industrial transformation paths that are credible, visible and robust. This means changing the assets, processes, organisation and sometimes even the business model of the target company. The challenge is less about speed than about the depth of the impact.
A Changing Investment Framework
The transformations observed in 2025 should be seen as early indicators of a broader paradigm shift. Heightened regulatory complexity, geopolitical uncertainty, and the fragmentation of global value chains are fundamentally reshaping the playing field for industrial investors. In this environment, the top-performing funds will be those that can integrate industrial strategy, operational excellence, and long-term financial resilience.
This new cycle does not mark the end of industrial private equity, but rather its evolution. It calls for a departure from a purely financial logic and a renewed focus on the structural transformation of industrial businesses. Today, value creation lies not merely in market opportunities, but in the ability to execute with depth and discipline.