European corporates stand at a crossroads, battered by a convergence of persistent challenges: weak economic growth, geopolitical instability, inflation, and rapid industry change. While some sectors adapt and thrive, many are struggling to secure the necessary financing to transform, particularly as traditional lenders grow wary. The result is a financial ecosystem in flux, with private capital and innovative restructuring tools emerging as both a necessity and an opportunity for embattled companies.
European corporates face economic stagnation and rising geopolitical risk
The post-pandemic rebound for European corporates proved to be short-lived. Economic growth among the EU-27 stagnated at around 1% in 2023 and 2024, and Germany, historically a bellwether of stability, posted two consecutive years of contraction. In “The Perfect Storm,” the 2025 edition of our annual restructuring report, nearly two-thirds of the corporate executives we surveyed ranked geopolitical risk — spanning wars, trade disputes, and macroeconomic uncertainty — as one of their chief concern. Sixty-two percent grapple with ongoing cost inflation, starkly elevated from years prior, while over a third must adapt to disruptive forces within their own industries.
Across sectors, fortunes heavily diverge. Technology/IT and defense stand resilient, increasing earnings before interest and taxes (EBIT) margins or revenues despite adversarial market conditions, while most others falter, our analysis shows (Exhibit 1). Chemicals, consumer goods, electronics, and transportation saw profits erode between 2023 and 2024; in automotive and oil and gas, these pressures are exacerbated by technological disruption and supply chain shifts.
Private capital steps in as struggling sectors face lender pullback
Transformation demands capital — for strategic investments, innovation, or simply refinancing mid-term obligations. But when nearly half of lenders plan to reduce risk exposure in the near future, and a third intend to shrink their loan books altogether, the competition for funding becomes fierce — especially for sectors already under strain.
The situation is most acute among the automotive supply, construction, retail, and manufacturing sectors, which many financiers perceive as unattractive loan candidates. By contrast, they view energy, tourism, aerospace, and electronics more favorably (Exhibit 2). This bifurcation creates a "perfect storm": Sectors that are most in need of financing for their transformation are being locked out by increasingly cautious lenders.
As the more traditional financiers retreat, private capital — namely, private debt and private equity funds — is seizing the moment. While only around a fifth of corporates rely on private debt today, more than half expect it to become a key resource for restructuring efforts in the immediate future (Exhibit 3). Private equity is also poised for significant growth, but providers remain highly selective, insisting on credible restructuring prospects before investing.
Management expertise and restructuring strategy are key to crisis financing
If a company’s ability to offer collateral or even substantial equity once counted most in securing funding, the priorities have now shifted. More than three-quarters of surveyed financiers cite a robust restructuring plan as the primary prerequisite for lending. Management’s turnaround expertise and professional liquidity management follow closely. Surprisingly, environmental, social, and governance (ESG) requirements, once seen as vital, now play little or no role in crisis financing (Exhibit 4) .
This shift is both a challenge and an opportunity: It places responsibility in the hands of corporate leadership. Companies able to demonstrate a clear, credible path to stability and growth stand the best chance of attracting support.
The role of trusteeships and innovative financing models in restructuring
Complex restructurings often necessitate changing the very structure of corporate ownership or financing. Restructuring vehicles such as trusteeships and special purpose vehicles (SPVs), and emerging models like “shareholding as a service” (ShaaS), offer means to realign stakeholder interests, accelerate decision-making, and introduce fresh funding — even in a crisis. More than half of restructuring experts believe these tools can professionalize the process, sharing both risks and rewards among all parties involved.
Yet a glaring knowledge gap persists. Trusteeships, the most frequently used vehicle in restructurings, still remain unfamiliar to a third of survey participants. Even more respondents lack experience with restructuring SPVs or ShaaS solutions, underscoring a need for broader awareness and promotion of these vehicles. The message is clear: These instruments prove to be useful, but can never truly replace the need for an executable restructuring concept and strong, credible leadership.
Navigating the perfect storm in finance and corporate restructuring
The results of our survey highlight several key imperatives for navigating the road ahead. First, as banks lower their risk exposure, forward-looking firms must build relationships with private debt and equity providers, understanding their rigorous demands for restructuring and operational transparency. Companies also should prioritize the development of a robust restructuring plan, supported by experienced leadership and professional liquidity management. Finally, it’s vital to leverage underutilized vehicles such as trusteeships, SPVs, and ShaaS that can simplify complex restructurings and break deadlocks among stakeholders.
It’s clear that the era of easy credit and business as usual is over. Success in this environment will come to those who adapt quickly, plan strategically, and recognize that the keys to survival — and growth — rest firmly within their own management and vision. In the perfect storm, leadership, preparation, and agility will prove to be the ultimate shelter.
