Key Takeaways
- • Midlands private equity investment declined 10% in H1 2026 compared to H1 2025, with 87 deals completed, reflecting investor caution driven by geopolitical tensions and AI valuation uncertainty.
- • Private equity exits collapsed 68% year-over-year, falling from 19 transactions in H1 2025 to only 6 in H1 2026, signaling reduced liquidity appetite among investors.
- • Bolt-on acquisitions dominated deal activity with 58 completed transactions (67% of total deals), while traditional buyouts represented 17% and minority stake deals 10% of activity.
- • The Midlands maintained its position as the third-largest regional private equity hub in the UK despite the decline, accounting for 10% of total new PE backing nationally, behind only London and the North West.
- • Deal activity by volume increased across five other UK regions (South East, South West & Wales, North West, Yorkshire, and North East) in H1 2026 versus H1 2025, suggesting geopolitical headwinds disproportionately impacted Midlands investment.
Summary
Private equity investment in the UK Midlands declined materially in the first half of 2026, according to KPMG UK's mid-year private equity pulse report. Total PE investment in the region fell 10% compared to the same period in 2025, with 87 deals completed. The decline underscores heightened investor caution across the market amid multiple macroeconomic headwinds.
The pullback in Midlands deal activity reflects two primary concerns cited by market participants: ongoing geopolitical tensions and widespread uncertainty regarding the impact of artificial intelligence on asset valuations. Stuart Sewell, head of M&A for the Midlands at KPMG UK, noted that "the last six months has seen private equity deal volumes reduce in the Midlands, as ongoing geopolitical tensions and uncertainty around the impact of AI on valuations make investors more cautious." Despite these pressures, Sewell emphasized that "we're still seeing resilience beneath the surface" in the regional market.
Exit activity contracted more sharply than new investment, with private equity exits plummeting 68% year-over-year to just 6 transactions in H1 2026 from 19 in H1 2025. This significant decline in exit volume suggests investors face reduced availability of buyers and heightened valuation uncertainty when attempting to monetize positions.
Within deal composition, bolt-on acquisitions remained the largest category with 58 completed transactions representing 67% of all deals—reflecting a preference for lower-risk, accretive add-on strategies over larger transformational transactions. Traditional buyouts, including leveraged buyouts, accounted for 15 deals (17% of total), while minority stake investments represented 9 transactions (10%).
Despite the contraction, the Midlands retained its standing as the third-largest regional private equity investment hub in the UK, behind London and the North West, accounting for 10% of total new PE backing nationally. Notably, deal activity by volume increased across five other UK regions—the South East, South West & Wales, North West, Yorkshire, and the North East—suggesting the Midlands underperformed relative to other regions in H1 2026.
The pullback in Midlands deal activity reflects two primary concerns cited by market participants: ongoing geopolitical tensions and widespread uncertainty regarding the impact of artificial intelligence on asset valuations. Stuart Sewell, head of M&A for the Midlands at KPMG UK, noted that "the last six months has seen private equity deal volumes reduce in the Midlands, as ongoing geopolitical tensions and uncertainty around the impact of AI on valuations make investors more cautious." Despite these pressures, Sewell emphasized that "we're still seeing resilience beneath the surface" in the regional market.
Exit activity contracted more sharply than new investment, with private equity exits plummeting 68% year-over-year to just 6 transactions in H1 2026 from 19 in H1 2025. This significant decline in exit volume suggests investors face reduced availability of buyers and heightened valuation uncertainty when attempting to monetize positions.
Within deal composition, bolt-on acquisitions remained the largest category with 58 completed transactions representing 67% of all deals—reflecting a preference for lower-risk, accretive add-on strategies over larger transformational transactions. Traditional buyouts, including leveraged buyouts, accounted for 15 deals (17% of total), while minority stake investments represented 9 transactions (10%).
Despite the contraction, the Midlands retained its standing as the third-largest regional private equity investment hub in the UK, behind London and the North West, accounting for 10% of total new PE backing nationally. Notably, deal activity by volume increased across five other UK regions—the South East, South West & Wales, North West, Yorkshire, and the North East—suggesting the Midlands underperformed relative to other regions in H1 2026.
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