It’s likely 2026 will go down in the history books as the year the ketchup came out of the bottle in European carve-out dealmaking.

“It has been a very busy year for carve-outs, with generally a much better transaction completion rate compared to recent years,” said Joakim Notö, Managing Partner at Mimir.

A staggering EUR 150.4bn in carve-out assets have been sold across the region year-to-date (YTD), marking a 33% increase year-on-year (YoY) and the highest deal volume for such transactions in Europe in 12 years, according to Mergermarket data.

The largest deal was the carve-out of Unilever’s food business, in which the entity is tying up with McCormick at a valuation of EUR 37.1bn.

We also saw one other megadeal of more than EUR 10bn – Bouygues Telecom, Orange and Iliad’s joint EUR 20.3bn pending acquisition of Altice France’s telecom business SFR.Source: Mergermarket, data correct as at 04-Nov-26

This year appears to have seen the release of a backlog of deals. “Many non-core businesses that have been for sale in recent years, have not concluded for various reasons, creating a pent-up demand,” Notö said.

Many corporates delayed carve-out sale during 2022-2024 due to financing markets’ volatility and valuation challenges. Certainly, for the first nine months of 2026, the environment was more stable and financing became less restrained, supporting a flow of deals. Revived Middle East tensions, unorthodox market interventions by US Treasury Secretary Scott Bessent, a Fed rate hike, and midterm election concerns muddied the waters in recent weeks, taking high yield spreads higher.

But a clear result in those elections and Brent Crude oil falling from an October high of USD 116/bbl to USD 96 today (5 November), alongside robust central bank action – the Bank of England today raised interest rates – hold out hopes that markets will react to inflation being tamed and continue to be accommodative.

Increasing sponsor interest

The sponsor exit market has remained soft in recent years, especially at the larger end, creating more demand for corporate assets.

Higher interest rates have made financial engineering less effective as a source of returns, pushing sponsors to rely more heavily on operational and other value-creation levers such as transforming a carve-out business, Notö said.

“We’re seeing growing interest in carve-outs, with a number of larger private equity firms saying they expect to do more of these deals,” Notö said.

One emblematic case is TPG’s acquisition of Optum UK from UnitedHealth Group for EUR 340.14m. As a patient records player, there are strong AI growth levers, a clear data moat and defensive public healthcare demand that provide opportunities for a sponsor to drive value.

“Perhaps that’s a sign that the market is shifting back to basics and away from what has been driving returns for a long time, leverage and strong GDP growth,” Notö said.

This means that investors increasingly need to create value through strategic and operational improvements, but that is of course much harder for sponsors to execute, Notö said.

That execution challenge is reflected in the numbers, with 75% of the total carve-out volume YTD driven by strategic buyers, with the remaining 25% sponsor-backed.

Source: Mergermarket, data correct as at 04-Nov-26

From the sellside perspective, it is always a good time for a carve-out sale, according to Notö. “If you have a good macro environment, you will sell things, but equally if you are in a bad macro environment you also need to sell,” he said. Good times provide attractive valuations; leaner periods bring focus on getting the barnacles off the boat.

The pipeline of European carve-outs includes listed Belgian chemicals company Syensqo’s Performance & Care division, as reported by this news service.

By geography, the highest contributor to European carve-outs volumes YTD was the UK which has seen 184 deals worth EUR 64.4bn. Count-wise, Germany led, with 203 deals worth EUR 10bn.

“Germany is under high pressure at the moment, and we expect to see a lot more corporates to make carve-outs of underperforming businesses,” Notö said. Productivity challenges have dogged German industry in recent years, with the country having been reliant on Russian exports of gas to provide cheap energy prior to its invasion of Ukraine.

The German pipeline of carve-out sales includes Permira-backed fine chemicals manufacturer CABB’s specialty ingredients unit, as reported by this news service.

Meanwhile, Klöckner & Co, a German-headquartered steel and metal processor, last month announced the sale of its subsidiary Becker Group to a consortium comprising Accura Investment Partners and Becker Consult + Beteiligungs for an undisclosed consideration.

Appeasing competition authorities is another driver for carve-outs. This is evidenced by Finland’s KONE, expected to sell most of German rival TK Elevator’s (TKE) European businesses to easy antitrust concerns for the EUR 29.4bn deal. It has been estimated that the disposals could generate around EUR 2.1bn in proceeds.

“Sometimes advisors say that all corporate divestitures are done and large corporations broadly have clean portfolios. This is not at all true. On average, there are the same amount of non-core businesses in the market that need to be sold at any point in a cycle,” Notö said.

Ultimately, the success of corporate divestitures depends on skilled deal execution and proper planning on both the sell and buyside. “Carve-outs are typically very complex situations, where defining and separating the asset to be sold is often difficult – but of course absolutely key for swift success,” Notö said.

The fundamental driver of carve-outs is ever present: “you always need to evolve and change your business,” Notö said.