The investment bank DC Advisory anticipates that venture capital will begin to execute exits and crystallize part of its portfolio investments throughout this year in Spain, especially in those holdings that already accumulate holding periods of between five and six years, according to its report "European Private Equity Mid-Market Monitor Q1 2026 & Outlook".
However, the pace of operations could be conditioned by the evolution of the geopolitical context. In this regard, the document emphasizes that a ceasefire would contribute to strengthening confidence and boosting the market, while "the opposite will occur if Europe becomes more directly involved in the conflict".
Even so, the entity maintains "positive" prospects for Spain: "The economy is growing despite global disruptions; this attracts foreign investment and strengthens national activity, in addition to driving the growth of key sectors such as engineering and energy production".
DC Advisory recalls that Spain is the fifth largest electricity generator on the continent, with renewable energies contributing around two-thirds of the total production, in a scenario where states are trying to gain energy autonomy in the face of geopolitical tensions related to supply.
Consequently, and despite the rebound in energy costs and inflation, the report highlights that the Spanish economy "has maintained its growth rate during the last quarter".
"This positive outlook is reflected in the growing interest of pan-European investors and in the opening of new offices by important investment groups, such as IK Partners and Bluegem Capital Partners," adds the investment bank.
M&A Activity in Europe and Delayed Recovery
Across Europe, mergers and acquisitions (M&A) activity continues to show resilience, with a year-on-year decrease of 3% in the number of transactions and a "more prudent and selective" environment.
Likewise, the 12% contraction in transaction volume during the first quarter of 2026, combined with post-pandemic lows in 'platform deals', points to "a delayed recovery in deal-making until the end of 2026".
Greater Caution from Buyers and Financiers in Spain
In the Spanish market, DC Advisory has detected "a growing reluctance" from buyers to get involved in highly competitive processes by funds, opting instead to participate "selectively".
"There is a strong desire to avoid dedicating time to opportunities where the probability of closing the deal is low," the firm indicates about the current dynamics of private equity in Spain.
In parallel, although banks and debt funds remain present, they are adopting "even greater caution" than venture capital investors. "The availability of debt for leveraged buyouts is becoming increasingly restrictive, making pre-sale refinancing more common than it was a year ago," the report details.
Funds nearing the end of their cycle and technological impact
The analysis also shows that a good portion of the private equity vehicles raised in Spain before the pandemic are approaching the end of their ordinary investment periods, with a peak pressure point expected for 2028 and 2029.
However, LPs ('limited partner') "tend to be reluctant to push for exits in the current market, recognizing that premature exits could harm asset value."
Among the key factors is the behavior of the technology sector, which has managed to improve its gross margins and increase its revenues. Despite this, investors remain concerned about the effect of artificial intelligence on certain subsegments, particularly software.
In this context, DC Advisory concludes that "there is pressure to gradually strengthen existing portfolio assets -- exploring bolt-on acquisitions, demonstrating cash generation, creating incremental value -- rather than attempting multiple exits and new investments in a single year."