TowerBrook says services opportunities are strongest in H2 outlook

TowerBrook services opportunities remain the firm’s strongest area for new investment as AI changes company economics and private equity exits stay constrained, managing director Joseph Knoll told PE Hub. Knoll said TowerBrook is optimistic about H2 and the period ahead, while noting that about 79 percent of the firm’s exits over the past two years have been sales to strategic buyers, compared with 21 percent to financial buyers.

Knoll leads TowerBrook’s financial services sector team and co-leads its business services sector team in Europe. He told PE Hub that elevated leverage, sector re-rating, AI-led disruption and exposure to software are putting pressure on returns across the private equity industry.

TowerBrook’s recent transactions include the acquisition of French sports platform ID Unlimited and the purchase of MSA Mizar from Columna Capital, according to PE Hub.

Why is TowerBrook focused on services?

Knoll said TowerBrook starts with the business model rather than the sector label, asking whether AI is likely to improve a company’s economics or erode them through commoditisation. He identified business services, financial services and healthcare services as the areas with the strongest opportunities, because AI can raise productivity and improve customer outcomes.

He also pointed to TowerBrook’s consumer vertical, where he said AI can reduce the cost of serving customers. In private equity underwriting, that distinction matters because buyers assess whether a company’s earnings can grow through operational change, pricing discipline and expansion, rather than relying only on higher valuation multiples at exit.

Knoll said firms with strong earlier fund vintages, sector knowledge and the ability to transform businesses should find H2 a favourable period for investment. He described TowerBrook’s approach as value investing built around disciplined entry pricing, thesis-led sourcing, sector expertise and operational improvement.

How TowerBrook compares Europe and North America

Knoll told PE Hub that TowerBrook evaluates opportunities on both sides of the Atlantic through global sector teams. The firm invests in Europe or North America depending on where it sees the best risk-adjusted alpha, he said.

Europe can offer lower average entry multiples, according to Knoll, but he said organic growth and acquisition-led expansion may carry more risk there because of regulatory and political conditions. He said TowerBrook favours fragmented mid-market businesses, including founder-owned and family-owned companies, where relationships can influence deal outcomes and price is not the only factor.

What is TowerBrook saying about private equity exits?

Knoll said the firm’s exit activity has remained active despite a difficult market for realisations. He cited TowerBrook’s sale of CarTrawler to Expedia as a recent example of the firm’s emphasis on strategic buyers.

Across private equity, Knoll said longer holding periods have become a drag on performance. He told PE Hub that growth often becomes less straightforward after five years, as companies face slower expansion, stronger competition and AI-related disruption.

He also said the gap between valuations and realised exits remains a central industry problem. According to Knoll, 2025 private equity distributions to paid-in capital were materially below long-term averages, even as public markets stayed relatively resilient, and average exit uplifts have narrowed compared with the previous decade.

Knoll said the current exit market is clearing selectively. He described mid-cap assets seen as essential by buyers as the most open lane, while other mid-cap companies face a harder process and large-cap assets remain exposed to uncertainty around initial public offerings.

For TowerBrook, Knoll said exit planning begins before a company enters the portfolio. He told PE Hub the firm underwrites the most likely route to sale, often to a strategic acquirer, and builds an operational plan at the time of investment.

This story draws on original reporting from PE Hub.