Private equity activity in the UK has exceeded historic levels of both deal volumes and values during the first half of 2022, compared to the same period in 2018 and 2019. Although deal volumes and values were down on 2021 – falling 29% to 676 and 32% to £65.6 bn respectively – activity levels were above pre-pandemic levels.
UK mid-market private equity activity in the UK has exceeded historic levels of both deal volumes and values during the first half of 2022, compared to the same period in 2018 and 2019.
Our research revealed both deal volumes and values declined in H1 2022 after the post-lockdown surge of 2021, down around 19% and 16% respectively on the same period last year. However, compared to 2019 the 391 deals completed was 44% higher than the same period in 2019, while the aggregate deal value of £22 bn was 26% higher than the £17.45 bn achieved in H1 2019.
TMT and Business Services experienced sustained growth
In H1 2022, Business Services and TMT maintained their number one position in terms of mid-market deals, accounting for nearly two-thirds (60%) of private equity investments in the UK’s mid-market. The ongoing trend for hybrid working and digitally enabled services encouraged this trend.
Healthcare and Financial Services also performed strongly, with their proportion of deal volumes growing in H1 2022, with 10% and 11% respectively.
Exits saw significant drop-off
Although there was a slight recovery in exit volumes in 2021, UK mid-market private equity exits saw a significant drop-off in H1 2022 – down to just 59 deals at a value of £3.2 bn. This was the lowest volume of exits for at least five years, 71.5% down on 2021 and 54.6% down on 2019.
Secondary Buyouts (SBOs) have stepped in as a primary exit route, with over 50% of aggregate value coming from SBOs, which accounted for 55% of the total volume of exits. This shift in the destination of exits is a result of the closure of the Capital Markets and a partial pullback by trade acquirers.
Mid-market private equity deal multiples showed resilience
In terms of mid-market deal multiples, these dropped only marginally from 12x in 2021 to 11.4x in the first half of the year. It was a less rosy picture for the wider private equity market, where deal multiples contracted from a record level of 13.5x in 2021 to 10.9x in H1 2022. This echoes a similar reduction in the UK M&A market from 12.5x in 2021 to 10.8x in H1 2022.