Key Takeaways
- • UK private equity deal completion timelines have extended significantly in H1 2026, driven by geopolitical uncertainty, tariff concerns, and heightened scrutiny on valuations and deal pricing, according to Alex Hartley, Partner and Head of Corporate Finance at KPMG UK.
- • Deal volumes declined 17.1% year-on-year in H1 2025, with only 726 deals completed, signaling a market recalibration rather than a full retreat; mid-market PE accounted for over 56% of all transactions (412 deals) with an 11.3% decline.
- • Industrials, business services, healthcare, and TMT sectors remain bright spots with sustained investor interest despite broader market volatility.
- • Potential UK autumn budget tax changes may accelerate seller exits and create a near-term window for renewed deal activity, while improved exit conditions and stabilizing macroeconomic signals in Q1 2026 support cautious optimism for capital deployment and LP returns.
- • Market fundamentals in UK private equity remain solid; the slowdown reflects alignment challenges in final-stage negotiations rather than loss of buyer appetite.
Summary
The UK private equity market has entered a recalibration phase in the first half of 2026, characterized by extended deal timelines and heightened scrutiny rather than a fundamental loss of appetite. Alex Hartley, Partner and Head of Corporate Finance at KPMG UK, attributes the slowdown to economic uncertainty rooted in geopolitical events and concerns over tariff impacts. While the expectation entering 2025 was for continued M&A momentum following strong deal numbers, the reality has proven more volatile, with deals stalling in final stages due to greater valuation scrutiny, intensified due diligence, and buyer demands for price certainty.
The data reflects this shift. H1 2025 recorded just 726 completed deals, representing a 17.1% year-on-year decline. Within this broader contraction, mid-market private equity showed relative resilience, accounting for over 56% of all transactions (412 deals), though even this segment declined 11.3% compared to the wider PE market's steeper fall. These figures indicate a selective, disciplined approach by investors rather than a wholesale market pullback.
Despite the slowdown, bright spots persist across specific sectors. Industrials, business services, healthcare, and technology, media, and telecommunications (TMT) continue to attract robust investor interest. This sectoral strength suggests that strategic positioning and sector fundamentals matter increasingly in this environment where overall activity has contracted.
Near-term catalysts for renewed activity appear on the horizon. Potential tax changes in the UK autumn budget may motivate sellers to accelerate exits, potentially opening a window for heightened deal flow. Additionally, Q1 2026 showed signs of cautious optimism, with improving exit conditions and stabilizing macroeconomic signals. Market participants and KPMG project that activity will return in 2026, driven by the deep desire to deploy capital, conclude exits, and deliver returns to limited partners.
The market environment underscores that success in current conditions requires discipline, precision, and timing. While fundamentals remain solid, the path to deal completion has become more complex and extended, rewarding investors who can navigate heightened scrutiny and achieve alignment between buyers and sellers on valuation and deal certainty.
The data reflects this shift. H1 2025 recorded just 726 completed deals, representing a 17.1% year-on-year decline. Within this broader contraction, mid-market private equity showed relative resilience, accounting for over 56% of all transactions (412 deals), though even this segment declined 11.3% compared to the wider PE market's steeper fall. These figures indicate a selective, disciplined approach by investors rather than a wholesale market pullback.
Despite the slowdown, bright spots persist across specific sectors. Industrials, business services, healthcare, and technology, media, and telecommunications (TMT) continue to attract robust investor interest. This sectoral strength suggests that strategic positioning and sector fundamentals matter increasingly in this environment where overall activity has contracted.
Near-term catalysts for renewed activity appear on the horizon. Potential tax changes in the UK autumn budget may motivate sellers to accelerate exits, potentially opening a window for heightened deal flow. Additionally, Q1 2026 showed signs of cautious optimism, with improving exit conditions and stabilizing macroeconomic signals. Market participants and KPMG project that activity will return in 2026, driven by the deep desire to deploy capital, conclude exits, and deliver returns to limited partners.
The market environment underscores that success in current conditions requires discipline, precision, and timing. While fundamentals remain solid, the path to deal completion has become more complex and extended, rewarding investors who can navigate heightened scrutiny and achieve alignment between buyers and sellers on valuation and deal certainty.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.