Carlsquare PE Conversations

Edition no. 1

Conversation with Inflexion Private Equity: Backing Ambition in the European Mid-Market

We sat down with Inflexion’s Martin Preuss (Partner & Head of DACH) to discuss their fundraise, their DACH ambitions, and how they are navigating an M&A environment shaped by AI, geopolitical uncertainty and Germany’s historic fiscal shift.

Congratulations on raising your new €4.5bn “Inflexion Buyout Fund VII”. What have been the main reasons for the successful fundraising in what has been a challenging fundraising environment for many?

The fundraise felt like a reflection of something we have always believed: that if you back ambitious management teams, help them grow faster than they could alone, and deliver real returns to investors, the rest follows.

Investors representing more than 100% of our previous fund’s size recommitted — which means a great deal to us — with many of our investors being with us for over ten years. At the same time we welcomed over €1 billion from new relationships, including our first Latin American investors.

LPs today are rigorous and selective, and rightly so. DPI — real, distributed cash returns — has moved firmly to the top of the agenda. Eight out of nine of our fully realised and realising funds have delivered top-quartile DPI, and that record was central to every conversation we had. We also took a deliberate decision not to use a global placement agent; every LP relationship is built and maintained directly by our team, because we believe in long-term, direct relationships — with investors just as much as with the management teams we back.

The structural case for the European mid-market also resonated strongly. Europe remains around 75% less penetrated by private equity than the US. Our portfolio businesses delivered around 20% topline growth over the past three years, against European GDP averaging around 1.5% annually. That differential — which comes from backing genuinely ambitious, structurally growing businesses — is what investors are buying into.

Following the opening of your Frankfurt office in 2024, how does the new fund shape Inflexion’s strategy for the DACH market?

Our commitment to DACH is long-term and comes from genuine conviction in the region — not from following a trend. DACH represents roughly 30% of European GDP yet has the lowest private equity penetration of any major European economy. There are exceptional businesses here, run by ambitious entrepreneurs and management teams, who often haven’t yet found the right growth partner. That is exactly the gap we want to fill.

With Buyout Fund VII at €4.5bn alongside our Partnership Capital fund, we have significant capital ready to deploy — we are looking to deploy several hundred millions in the region across both funds in the coming years.

But capital alone is never the differentiator. What we bring is a deeply hands-on approach to accelerating growth: a dedicated Value Acceleration team of nearly 20 specialists, a network of sector advisers and operating partners, and genuine expertise in the sub-sectors we back. We have done this in technology, healthcare, business services, industrials, and financial services across many cycles, and we apply real pattern recognition each time we invest.

We have also grown our local team who work alongside our London based sector experts. This mix of on the ground team and sector experts is a real differentiator. We believe that being genuinely present in the market, building relationships over time, and understanding local business culture is what allows us to be the partner management teams actually want to work with.

How would you summarise 2025 for Inflexion in DACH, and has Q1 2026 played out in line with your expectations? In your view, what were the main drivers behind these recent developments?

2025 was a year we are proud of. The highlight was completing our investment in Finanzen.net at the start of the year — a carve-out of a genuinely leading DACH investment platform that we structured bilaterally, moving quickly and with conviction when the original process broke down. The business has outperformed our investment case in both 2024 and 2025, with around 30% topline and EBITDA growth, and the transformation programme is running ahead of plan. It is a good example of what we try to do: back an ambitious leadership team, give them the support to execute at pace, and help them build something significantly more valuable. 

On origination, we assessed well over 165 opportunities and built the most active bilateral pipeline we have had in the region. We were very close to an investment in two situations but stayed disciplined on price. The market picked up sharply in the second half of the year, supported by ECB rate cuts, easing inflation, and pent-up M&A. Q1 2026 has carried that momentum forward. The new German government’s infrastructure and defence spending programme is a meaningful shift in the macro backdrop. We are seeing good pipeline momentum, but this has recently slowed down because of the Iran conflict, continued tariff uncertainties and the technology market volatility.  

Artificial intelligence and the current macro environment are two forces that every investor is grappling with right now. How are they influencing Inflexion’s existing portfolio? What opportunities are emerging as a result of these trends and what are you actively avoiding?

On AI, our starting point is always a practical one: how can this make the businesses we back grow faster and compete more effectively? We are focused on where AI is creating genuine, durable competitive advantage for our management teams.

Within our DACH portfolio, Finanzen.net is a good example. We are actively working with the team on how AI can deepen product personalisation and improve the experience for retail investors at scale — it is a real growth lever, not a side project. More broadly across our portfolio, we see AI driving meaningful productivity improvements, better customer outcomes, and in some cases entirely new revenue streams. Our Value Acceleration team works directly alongside management to identify and implement these opportunities — not from a distance, but as genuine partners in execution.

What we are actively avoiding is backing businesses whose competitive moat depends on information asymmetry or human process complexity that AI is likely to erode. We are also wary of businesses being valued as AI stories before the commercial reality has been proven. The question we always come back to is: will this business be stronger or weaker in five years because of how AI is developing? If the answer is stronger — because the management team is moving quickly, the product is evolving, and the structural demand is non-discretionary — that is where we want to be.

Looking ahead, what is your outlook for private equity deal-making and exit activity in 2026? Which factors will be most decisive in shaping the environment?

The conditions in Q1 were better than they have been for several years: financing is more accessible, bid-ask spreads have narrowed as holding values and exit multiples have converged, and the significant backlog of 2021-vintage assets is beginning to move. We expect sponsor-to-sponsor activity to increase, and for more structured liquidity solutions — earnouts, vendor rollovers, minority stakes — to become increasingly common as sellers and buyers find creative ways to bridge valuation expectations.

For DACH specifically, the macro tailwind from Germany’s fiscal stimulus adds a further dimension. Infrastructure and defence spending at this scale creates real investment themes and improves business confidence broadly. However, the Iran conflict, continued tariff uncertainty and volatility in technology markets will bring uncertainties to the M&A market in 2026.

But beyond the market environment, the deals we are most excited about are not the ones driven by market conditions — they are the ones where we find a management team with real ambition, a clear vision for where they want to take their business, and a desire for a hands-on partner who will back them to get there faster. Those conversations are happening all the time, in good markets and difficult ones.

From Carlsquare’s perspective, Inflexion’s trajectory in DACH is a signal worth watching. The region remains structurally underserved by private equity relative to its economic weight — and the combination of Germany’s fiscal stimulus, ECB rate normalisation and a maturing generation of owner-managed businesses creates a compelling pipeline for well-capitalised, operationally hands-on sponsors. At the same time, the near-term headwinds — tariff uncertainty, geopolitical tensions and technology market volatility — mean that selectivity and execution discipline will separate the winners. Inflexion’s bilateral deal origination approach and track record on DPI put them in a strong position. We look forward to continued dialogue with the team as activity in the region picks up.

About Inflexion
Inflexion is a leading European mid-market private equity firm with €20bn under management investing in high growth, entrepreneurial businesses with ambitious management teams and working in partnership with them to accelerate growth. Inflexion’s flexible approach allows it to make both majority and minority investments in businesses typically valued between €50m to €1bn. Investment criteria include €50-€600m equity in majority and minority investments across Technology, healthcare, business services, industrials, consumer and financial services subsectors in growing, high margin and capital light businesses. With bespoke teams and dedicated capital, Inflexion’s funds invest across six key sectors from offices in London, Manchester, Amsterdam, Frankfurt, Stockholm and New York. Each investment, regardless of size or stake, has full access to Inflexion’s value acceleration support which includes international expansion, acquisitions, digital transformation, talent enhancement, commercial effectiveness and sustainability. It also benefits from international experts across South America, APAC and India dedicated to portfolio development, enabling investee companies to benefit from privileged access to these fast growth markets. Read more at www.inflexion.com