UK transactions involving mid-market private equity investors cooled in the first half of 2023 amid market volatility and tough trading conditions. In H1 2023 there have been 327 deals worth £32 billion, reflecting a drop in volume of 12 percent when compared with the same period in 2022.

Rob Baxter, Partner, UK Head of Corporate Finance and Global Head of Consumer M&A and Alex Hartley, Head of Private Equity and London Regions, share their views on UK mid-market private equity activity in H1 2023.

For the overall private equity market, however, more clouds appeared on the horizon as 689 deals worth £70 billion were completed in the first half of the year, compared to 909 deals completed in H1 2022.

From a sector perspective, Business Services and Technology, Media, and Telecommunications (TMT) account for 63 percent of all mid-market private equity deals in H1 2023. Business Services accounted for 46 percent up from 40 percent in H1 2022, while TMT deals represented 17 percent, down from an average of 21 percent over the last five years.

Bolt-ons accounted for the majority of investments in the private equity mid-market, continuing the trend of the past few years. Overall, bolt-ons accounted for 67 percent of all deals in H1 2023, up from 63.7 percent over the same period in 2022 and 57.8 percent in H1 2019.

Looking ahead, there are reasons to be optimistic about the M&A market. The core building blocks are in place for M&A activity. With a slowdown in inflation there is hope this will create a more benign interest rate environment and the markets can being to pick up again.

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