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      If you’re the founder or director of a private enterprise business, driving growth is likely to be high on your agenda. Certainly, that’s what KPMG’s Private Enterprise Barometer published a couple of months ago found, with two-thirds of leaders planning to expand or diversify the business’ footprint by launching new products and services or entering new markets.

      But unlocking growth requires investment. And with margins tight for many at a time of cost pressures and macroeconomic uncertainty, accessing the capital needed becomes a key question.

      Alex Hartley
      Alex Hartley

      Partner, Head of UK Corporate Finance

      KPMG in the UK

      Private equity booming

      As our Barometer shows, for increasing numbers of private enterprise leaders the answer lies not in traditional high street debt – but in private equity instead. When asked how they planned to finance their growth plans, private equity was the top external source by some distance. Nearly half (46%) of leaders referenced it, far ahead of capital markets (31%), government support and grants (27%) and bank debt (23%).

      What’s behind this remarkable shift to private investment? On one level, it’s a simple case of going where the funding is: after a couple of quiet years due to subdued market conditions, private equity houses have built up record levels of dry powder which they’re keen to deploy into quality assets with recurring and reliable income streams. In particular, business services has become a hotspot: appetite to invest in tech-enabled legal, accountancy and other professional services businesses and platforms is running high. As much as 40% of private equity investment is going into the Business Services sector, while TMT businesses are also attracting significant capital (about 20%).

      Bolt-ons and buyouts in favour

      Another feature of the market is that with primary investment opportunities for PE still on the low side, PE houses are looking for bolt-on and follow-on investments where they can put more money behind proven management teams in existing platforms. We expect to see a continuing uptick in the number of bolt-on deals, especially in the mid-market.

      It all adds up to a high-potential market for growing, resilient private enterprises looking for a cash injection to take them to the next level or to de-risk with an investment partner. There has been a proliferation in the number of private equity houses investing in the mid-market over the last decade or so, meaning that they need to compete harder than ever with each other to secure deals. If you are at the helm of a strong business, this puts you in a good position: the PE firms need to show that they can bring real value to your enterprise. It’s not just a case of them turning up with the money anymore.

      However, that doesn’t mean it’s an easy ride for you, either. Investors must be convinced that your business has a strong business model, repeatable income streams, sound governance, future-fit technology systems. Due diligence will put you through your paces. Remember also that you are giving over a stake in your business: the PE house will be a new member of the ownership group and will also be become a Board member.

      External headwinds

      External market conditions also need to be taken into account. While the first quarter of the year as been busy, two factors are complicating the picture. Firstly, there is some nervousness about investing in software and other tech-based businesses in case what they do could be undermined or replaced by AI. This led to fears of over-valuations in the US where tech stocks plummeted as a result. There has been a ripple effect and the market in the UK remains cautious.

      Secondly, the war in the Middle East has inevitably undermined general confidence, with fears of rising energy prices and inflation as well as supply chain knock-on effects. Depending on how protracted the conflict is, it could create something of a drag on deal and investment activity.

      Nevertheless, the fundamentals are there – willing investors with considerable capital to deploy, looking for quality assets with ambition and drive.

      The next step on your journey?

      As the leader of a private enterprise business, are you and your management team alive to the potential of private equity investment? It could be the catalyst you need to reach that next milestone in your strategic plan.

      Bear in mind also that, unlike traditional debt, private equity investment can bring much more than just cash on the balance sheet. Most private equity investors want to be a partner with you in growing the business. They have a depth of expertise across different sectors. They may be able to bring valuable insights into international expansion or the deployment of AI, for example. Given that they will most likely want to exit their investment on a 4-5 year time horizon, they can also work with you on your own succession or exit planning – something that, all too often, founders and leaders simply don’t have the time to properly consider.

      If you’re looking to secure investment into your business, do get in touch. At KPMG, we have extensive links into private equity as well as other funding sources. We would be delighted to discuss how financing could become the game changer for you.

      Download the complete KPMG Private Enterprise Barometer 2026 to access in-depth analysis, practical strategies, and expert perspectives on the trends shaping the future of UK private businesses.
      Read your copy now and be part of the conversation shaping the next chapter of UK private enterprise.
      Download now

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