Reality star Kim Kardashian's arrival at a gathering of the globe's top deal brokers in Berlin failed to dispel their dark mood as the rising cost of money puts the brakes on the private equity industry.
Flanked by bodyguards, Kardashian drew a crowd of hundreds of executives at the SuperReturn industry event, saying she wanted to learn the secrets of investing having set up her own fund last year.
Talking about her ambitions, Kardashian, whose empire spans skincare and underwear, sought what she called the "magic sauce" or special qualities of founders of companies which her fund, that has yet to make an investment, could back.
But private equity is currently experiencing one of its toughest runs since coming of age in the 1980s as rapid rises in interest rates to combat inflation make the debt that underpins the industry scarce and expensive.
More than a decade of rock-bottom borrowing costs had allowed investors to snap up companies using vast loans before selling them on to other investors, who were also buoyed by cheap credit.
Now euro zone data shows that banks are turning off the credit taps after the European Central Bank raised rates by the most in its 25-year history.
The value of private equity-backed mergers and acquisitions in Europe stood at roughly $46 billion in the five months to end-May, down 74% from the same period of 2022, according to data from Refinitiv.
The technology sector has seen the most deals globally, while deals in healthcare reached $16 billion.
"It has been easier in the past, deal flow is reduced significantly...we have to pedal harder," said Jose Pfeifer, who leads Investcorp's European private equity group, on the sidelines of SuperReturn.
Much of the decline in deals can be attributed to slower processes and failed transactions, such as the recent abandonment of the sale of a stake in Germany's Bundesliga media rights, vetoed after opposition from its soccer clubs.
However, there are pockets of hope "if firms strengthen their conviction around the trajectory of interest rates", said Hythem El-Nazer, managing director at TA Associates.
Corporates are also driving some activity in Europe by streamlining portfolios and selling non-core assets.
"Europe is doing better than expected...we are seeing opportunity in corporate carve-outs," said Marco De Benedetti, co-head of Europe private equity at Carlyle.
Sellers that do brave the choppy waters are being more secretive than before with fewer organizing auctions, leaving buyers without clear deadlines and a lack of visibility.
Emmanuel Laillier, head of private equity at Tikehau Capital, said that makes it hard to read the level of competition, although there is more flexibility in the M&A process.
For example, strategic adjustments such as the sale of minority stakes and holding onto companies for longer are increasing.
That could also give rise to new structures to develop companies for longer under private ownership, said Christian Sindig, CEO at EQT, adding that public-to-private transactions will become a more regular fixture.
Kardashian, though, kept her cards close to her chest - all technical questions were directed to her investment partner, Jay Sammons.
