Winterberg Group’s Perspective on the Year Ahead 

At Winterberg Group, we specialize in small and mid-cap Buy & Build strategies, focusing on high-quality Mittelstand businesses in the DACH region. As we enter 2025, we see a renewed opportunity for sector consolidation, value creation, and operational transformation in key industries. 

With capital markets stabilizing, interest rates trending downward, and a strong backlog of portfolio companies seeking exits, the European private equity landscape is poised for accelerated deal activity. However, high valuations, sector convergence, and macroeconomic uncertainties make disciplined investment strategies crucial for sustainable growth. 

Among the many sectors seeing consolidation, we see strong potential in: 

Healthcare & MedTech: 

• Fragmentation in medical distribution & services – Many small and mid-sized healthcare providers operate independently, leading to inefficiencies. Consolidation allows for operational synergies, better bargaining power, and standardization of care. 

• Regulatory burden driving M&A – Stricter compliance (e.g., MDR, IVDR) makes it too costly for smaller firms to comply independently, increasing pressure to join larger, well-capitalized platforms. 

• Aging population & rising demand for specialized care – The growing need for orthopedic implants, chronic disease management, and home healthcare makes scaling through acquisition attractive. 

• Technology integration (AI & digital health) – Companies that adopt AI-assisted diagnostics, robotic surgery, and digital patient management will gain a competitive advantage, making acquisitions a way to speed up innovation adoption. 

Testing, Inspection, and Certification (TIC): 

• Mission-critical role in industrial supply chains – The demand for certified quality assurance, regulatory compliance, and precision testing is rising across manufacturing, energy, and pharmaceuticals. 

• Regulatory tightening & industry standardization – Stricter ISO and EU compliance standards make smaller TIC providers less competitive, increasing pressure to join larger, well-resourced platforms. 

• Need for scale to handle digitization – Automated testing, AI-driven inspections, and predictive maintenance require investment in technology, which small TIC firms struggle to afford. 

• Private Equity already driving sector roll-ups – TIC has proven resilient and highly cash-generative, making it attractive for Buy & Build strategies in niche testing & certification markets. 

Pet Services: 

• Strong consumer demand & recession resilience – Pet spending remains non-cyclical, with veterinary care and premium pet products continuing to grow, even in economic downturns. 

• Fragmented veterinary clinic landscape – The European veterinary sector is highly fragmented, with independent clinics struggling to compete on cost, technology, and branding. Consolidation enables economies of scale, centralized procurement, and digital customer engagement. 

• Growth of pet insurance & wellness services – The rise of subscription-based pet insurance and wellness plans creates opportunities for vertical integration, merging care services with insurance and retail. 

• Private Equity interest increasing – Multiple PE firms have entered the veterinary consolidation space, indicating a strong Buy & Build thesis. 

Personal & Medical Services: 

• Shift from traditional healthcare to self-care & aesthetics – Consumers are spending more on aesthetic treatments (e.g., Botox, laser procedures, and cosmetic dentistry), creating high-margin business models. 

• Fragmented market ripe for roll-ups – Most cosmetic clinics, dermatology centers, and aesthetic medical practices are run by independent operators, making them prime acquisition targets for larger platforms. 

• Technology driving differentiation – AI-assisted consultations, robotic hair transplants, and digital skin analysis are setting high-tech clinics apart, giving larger groups an advantage. 

• Regulatory trends favoring larger players – Tighter licensing, medical oversight, and quality standards make it harder for small providers to operate independently. 

AI Applications: 

• Move from hype to profitability – The AI sector is shifting from experimental projects to real revenue-generating applications, particularly in robotic surgery, automated quality control, and smart diagnostics. 

• Companies need scale to afford AI investments – Smaller firms struggle to fund AI implementation, making them attractive acquisition targets for PE-backed consolidators with capital to deploy. 

• Demand for AI-powered efficiency in manufacturing & healthcare – AI is revolutionizing diagnostics, workflow automation, and supply chain management, making acquisition-driven scaling essential. 

• Defense & industrial AI applications growing – AI-driven surveillance, drone automation, and cybersecurity are seeing rapid adoption, attracting PE and corporate investors. 

Defense & Aerospace: 

• Geopolitical instability increasing defense budgets – Rising tensions in Europe and the Middle East are driving governments and defense contractors to invest heavily in drone technology, cybersecurity, and intelligence systems. 

• High fragmentation among defense subcontractors – Many specialized technology suppliers (e.g., drone manufacturers, radar developers, and electronic warfare firms) remain small and lack the scale needed for international expansion. 

• Cross-border M&A interest from U.S. and EU players – Larger defense contractors are actively acquiring niche military tech firms to enhance their capabilities in AI-driven warfare, unmanned systems, and satellite surveillance. 

• R&D investment requirements favor larger platforms – Defense technology requires heavy upfront investment in R&D, favoring larger PE-backed groups that can spread costs across multiple subsidiaries. 

Our top-pick (and topic #1) – Healthcare & MedTech: A Prime Buy & Build Sector 

1. AI-Driven Transformation & Digitalization
   AI-powered diagnostics, robotic-assisted surgery, and digital patient management are reshaping the healthcare industry. However, fragmentation remains a challenge, particularly in medical distribution, niche medical devices, and outpatient care. 

   For Buy & Build investors, acquiring specialized MedTech distributors and service providers presents an opportunity to integrate them into larger, technology-enabled platforms. Winterberg’s experience with Healthcare Holding Schweiz AG illustrates how consolidating fragmented distributors creates economies of scale while leveraging AI and automation to improve operational efficiency.

2. Regulatory Complexity as an M&A Driver
   With Europe’s evolving medical regulations (e.g., MDR for medical devices, IVDR for diagnostics), compliance has become an expensive burden for smaller players. Many are seeking strategic partnerships or exits, creating strong Buy & Build opportunities in: 

   Clinical testing & certification – PE-backed platforms can standardize compliance processes, reduce costs, and scale geographically
   Outsourced regulatory services – Compliance consulting for MedTech firms is increasingly attractive as a scalable service model

3. Aging Population & Chronic Disease Management 

   The European aging population continues to fuel demand for orthopedic implants, dental care, and home-based medical services. Consolidating mid-sized healthcare providers and niche equipment manufacturers allows for operational synergies and expansion into adjacent markets. 

Where Winterberg Sees Opportunity: 

• Medical Device Distribution – Rolling up specialized distributors to create regional or category leaders 

• Outsourced Clinical Research & Laboratory Services – Standardizing fragmented testing & certification providers 

• Regulatory & Compliance Services – Acquiring niche consulting firms to serve the growing regulatory burden 

Our second bet (and topic #2) – TIC (Testing, Inspection, and Certification): Consolidation Beyond Mechanical Calibration 

The TIC sector is experiencing a structural shift, with industries demanding higher precision, compliance, and automation across various applications. 

1. Digitalization & AI in Industrial Testing
   The TIC industry is transitioning toward automated testing, predictive maintenance, and AI-powered quality control. Many small players struggle to keep up due to high investment costs, presenting consolidation opportunities for PE-backed Buy & Build platforms. 

   AI-supported defect detection, machine learning-based predictive maintenance, and remote inspection technologies are driving efficiency in sectors such as: 

    – Aerospace & Defense 

    – Automotive & High-Precision Manufacturing 

    – Energy Infrastructure & Renewables 

   
   

2. Expanding Beyond Mechanical Calibration

The market demand for precision testing extends beyond mechanical calibration into material testing, chemical analysis, and environmental compliance. 

Key Buy & Build opportunities include: 

ISO-certified testing labs – Acquiring and consolidating independent laboratories
Digitalized compliance platforms – Investing in software-based compliance solutions for regulatory tracking
Automation of industrial inspections – Integrating AI and robotics for real-time, non-destructive testing 

Where Winterberg Sees Opportunity: 

• Industrial Calibration Labs – Rolling up regional providers for scalability 

• Digital Inspection Platforms – Leveraging AI to improve compliance & efficiency 

• High-Value TIC Segments – Expanding into aerospace, defense, and green energy testing 

2025 Outlook: Discipline, Specialization, and Operational Execution Will Define Success 

The private equity landscape in 2025 will be shaped by ongoing macroeconomic uncertainty, high interest rates, and geopolitical instability—factors that have turned volatility into a permanent fixture rather than a cyclical phase. In this environment, value creation will increasingly rely on hands-on operational execution rather than financial engineering. 

Despite these challenges, the outlook for M&A activity is improving. A narrowing price gap, an expected increase in corporate carve-outs, and a more stable interest rate environment are likely to drive a rebound in deal volume. Surveys indicate that investor sentiment is turning more optimistic, with private equity firms planning a more aggressive approach to acquisitions compared to 2024. 

However, simply deploying capital will not be enough. The firms that succeed in 2025 will be those that embrace specialization, execute disciplined Buy & Build strategies, and leverage operational expertise to generate value. Winterberg Group is well-positioned for this shift, focusing on three core principles: 

• Targeting high-value, fragmented sectors where consolidation can create market-leading platforms 

• Using technology to drive efficiency and scalability in industrial, healthcare, and service-based businesses 

• Applying a rigorous, sector-focused Buy & Build approach to transform businesses through operational improvements rather than financial leverage 

While capital availability remains constrained and leverage terms remain difficult, firms with a strong operational value-creation playbook will gain a competitive advantage. The private equity industry is moving away from reliance on multiple arbitrage and cheap debt and toward genuine alpha generation through hands-on portfolio management. 

For investors who can navigate this complexity, 2025 presents a unique opportunity. The combination of industry fragmentation, technological transformation, and increased corporate divestitures will reward those who take a disciplined, value-driven approach to Buy & Build.