While hopes were high for a peak deal-making year in 2025, the UK market struggled with uncertainty. In the end, deal volumes sagged somewhat, with large-cap activity falling back to 2023 levels while mid-market activity remained steady.
There were certainly pockets of strong activity. Business Services – particularly accounting and legal service assets – were in high demand. Bolt-ons and primary buyouts were highly popular as investors sought to enhance the value of their underlying assets through scale and synergies, while accessing talent. Mid-market dealmaking remained resilient as new funds entered the market and investors looked for opportunities across the country.
Looking ahead, we remain cautiously optimistic that market activity will return in 2026, driven by a deep desire to deploy capital, conclude exits and deliver returns to LPs. At the same time, we expect the deals market to regain some of the confidence that was missing in 2025 as the political and economic environment stabilises.
Based on our experts’ view of the market, here are five key trends that PE investors and private market company owners should be monitoring throughout 2026.
Based on data from PitchBook and augmented with insights from our team of UK PE professionals, this report provides a snapshot of 2025 activity and some forecasts for 2026 and beyond. To learn more, or to discuss your fund or organisational strategy, we encourage you to contact us or one of our regional leaders.
2025 activity
Following a year of heightened activity in 2024, PE deal volumes settled back to 2023 levels.
Against a backdrop of economic uncertainty, continued valuation gaps and tariff instability, overall UK PE deal volumes fell 10.2 percent in 2025 while mid-market volumes remained fairly stable.
Throughout the year, PE investors were working hard to get deals completed and there were hopes that dealmaking would bounce back after the November Budget. Yet deal volumes remained depressed in the second half with just 870 deals closed in the period (versus 881 in the first half).
While volumes were up slightly versus those experienced in 2023 (up 2.5 percent year-on-year), the slow deals market pushed UK dry powder to record levels in 2025 (£190 billion according to the BVCA), suggesting significant deployments will likely be completed once confidence returns to the markets in 2026.
Sector review
Business Services remained the most active sector, but Consumer Goods and Industrials saw the biggest uptick in volume growth.
Business Services deals made up 45 percent of the deal count in 2025, up two percentage points from last year, suggesting that the sector remained a key focus for PE investors. However, overall activity was down around 11 percent year-on-year as investors took pause to consider the impact that AI and economic uncertainty may have on their investments and targets.
While TMT activity remained fairly strong, making up 18 percent of total deal volume, deal counts fell 24 percent compared to 2024, likely reflecting some nervousness about the impact of AI on SaaS businesses and media advertising. Healthcare deals also declined in the year (down 28 percent).
Energy deal volumes held up surprisingly well – falling just 1.5 percent – led by a number of strong deals. Financial Services also reported strong deal volume with 224 deals, a 2 percent drop from 2024.
Industrials enjoyed a significant boost (up nearly 50 percent year-on-year to 103 deals total) alongside Consumer Goods and Retail (up 4 percent), likely reflecting investors’ increased focus on established, high-quality assets with strong track records for profitability.
Mid-market deal activity closely tracked the wider market with robust dealmaking continuing in Business Services and signs of resilience in the Energy sector, Consumer Goods and Retail and Financial Services.
Deal types
While bolt-on deals continued to dominate PE deal markets, 2025 brought a notable surge in buyouts.
Bolt-on deals maintained their lustre across both the large-cap and mid-market segments, as PE investors looked to build scale in their existing platforms, particularly in Business Services. Bolt-ons represented 59 percent of the overall reported deals, but volumes were around 5 percent lower than their historical 5-year average.
Interestingly, the volume of buyouts surged to their highest level since 2021 (298 reported deals) while minority deal volumes dropped by 17 percent to 300 deals. This likely reflects Founders taking an ‘all or nothing’ approach to selling their businesses, particularly following changes to the capital gains tax regime in late 2024.
As we note later in this report, trade deals made up the lion’s share of exits through 2025, putting downward pressure on secondary buyout volumes which sank more than 28 percent in the year. Continued valuation gaps may have also led many PE investors to shift assets into continuation funds which would also contribute to lower-than-expected secondary buyout volumes.
Regions
The City retained its leadership position, hosting 44 percent of all UK PE deals, with the Midlands and the South West holding strong.
The London region retained its dominance with 779 deals – roughly on par with 2023 volumes but around 11 percent lower than 2024 – followed by the North West with 201 deals.
Deal activity remained strong in key regions. In the Midlands, for example, volumes were up 2 percent (to 188 deals) while the South West recorded 127 deals up 4 percent from 2024. Many other regions saw volumes increase off their 2023 base, including Scotland, the North West, Yorkshire and the Humber.
The biggest declines were seen in the South East, where deal volumes fell 27 percent year-on-year – from 180 deals to 131.
Exits
Following a strong exit market in 2024, exit counts fell to their lowest levels since 2020.
On the heels of a record-breaking season of exits in the second half of 2024, exit volumes experienced a significant decline across both large-cap and mid-market sectors in 2025. Overall exit count fell to 254 deals, the lowest level since the pandemic-induced doldrums of 2020. Year-on-year exit count fell 19 percent versus 2024 and 12 percent versus 2023.
The vast majority (60 percent) of the exits conducted in 2025 were to trade acquirers, followed by secondary buyouts which made up 36 percent of the exits over the year. There were also eight management buyouts and two IPOs.
Not surprisingly, the greatest number of exits happened in the Business Services sector which saw 86 deals made. Consumer and retail delivered the next highest number at 49 – slightly below the sector’s five-year average, while TMT reported 46 exits.
Outlook 2026
We expect activity to pick up pace in 2026 as investors look to deploy dry powder and disperse returns.
Following a challenging year for large-cap dealmaking and exits in 2025, we expect to see activity pick up considerably in 2026 on the back of improving fundamentals, greater market certainty and clearer political direction. Dry powder will need to be deployed. Returns will need to be generated. Disbursements will need to be delivered. Investors are very focused on ensuring 2026 is a solid year for both deployment and exits and are looking to start the year with strong momentum.
Over the first half, we expect to see continued focus on buyouts and minority deals as founders react to continued economic pressure and uncertainties. Those with high-quality, recurring revenue assets will likely see significant interest from PE. As market certainty returns and valuations start to creep back up, we expect to see exit activity improve as PE leaders seek to deliver returns to their investors and trade acquirers become even more active.
Based on our view of the market, here are three tips to help PE investors and private company owners capitalise on the opportunities.
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