Midlands mid-market private equity deal activity drops by nearly a quarter in the first half of 2023

• 28 mid-market private equity deals completed in the Midlands in the first half of 2022
• This represents a drop local of 24.3 per cent compared to the same period last year

Mid-market private equity investment in the Midlands cooled in the first half of the year amid market volatility and tough trading conditions, new analysis from KPMG UK has revealed.

The firm’s latest Mid-Market Private Equity study shows that 28 deals were completed in H1 2023, reflecting a drop in volume of 24.3 per cent when compared with the same period in 2022.

This downward trend was matched across the country with a total of 327 deals worth £32 billion completed in H1 2023, a drop in volume of 12 per cent.

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.

Khush Purewal, corporate finance partner at KPMG UK, said:

“Despite hopes of a continued upward trend and a return to greater stability in the market, factors including rising inflation and interest rates, and geopolitical uncertainty, have combined to have a significant impact on deals during the first half of 2023.

“For the remainder of the year, it can only be hoped that the market sees some easing allowing confidence to return and deal volumes to begin to rise.”

From a sector perspective, Business Services and Technology, Media and Telecommunications (TMT) took the top spots once again, accounting for almost two thirds (63 per cent) of all mid-market private equity deals in H1 2023. Business Services accounted for 46 per cent, up from 40 per cent in H1 2022, while TMT deals represented 17 per cent, down from an average of 21 per cent 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. There were 219 bolt-on transactions in H1 2023, representing a 47 per cent increase in volume on H1 2019. Overall, bolt-ons accounted for 67 per cent of all deals in H1 2023, up from 63.7 per cent over the same period in 2022 and 57.8 per cent on H1 2019.