Deal activity takes a hit in first half of 2025

• Global uncertainty saw total private equity investment stall to lowest levels since 2020.
• Mid-market deals also experienced a slowdown, albeit less severe.

Last year’s rebound in private equity investment stalled in the first half of 2025 as activity dipped to the lowest levels since the second half of 2020, according to KPMG UK’s mid-year private equity pulse.

The firm’s most recent M&A study revealed that deal volumes dropped 17.1% year on year, with a total of 726 deals closed throughout the first half of 2025 compared to 876 over the same period in 2024. The second quarter witnessed fewer deals compared to Q1 as geopolitical uncertainty put the brakes on activity across all private equity and the mid-market. Most deals took place in Q1 with 370, while Q2 saw only 356 deals close.

Bolt-on’s remained the largest component of private equity activity across all UK regions, making up over half of all deals with 412. Traditional Buyout/LBO was the second largest deal type with 134 deals, followed by minority deals with 128 closed transactions.

Deal activity slowed down across all regions in the UK, except the South-West, which experienced increased activity in terms of deal volume, compared with the first half of 2024 (57 vs 45 closed deals respectively).

UK mid-market activity:

The slowdown in the mid-market was less pronounced with a total of 377 deals in the first half of the year, representing a fall of 11.3% year on year.

London continued to account for the largest share of mid-market activity among all UK regions, with 168 deals (44.6% share). The North-West and Midlands were the next two leading regions with 41 deals each in the first half of 2025.

As with all private equity deals, bolt-on’s remained the largest component of mid-market activity across all UK regions with 217 deals.

Commenting on the findings, Alex Hartley, Head of Corporate Finance at KPMG UK, said:

“As we headed into 2025 off the back of strong deal numbers last year, the expectation was that M&A activity would continue to pick up. But economic uncertainty, driven by geopolitical events and nervousness around the impact of tariffs, has meant that the deals market has been slightly more volatile so far this year, and getting deals over the line is taking longer.

“That said, the mood remains cautiously optimistic, and there are still sectors where appetite remains strong, such as business services, healthcare and technology, media and telecoms. We may start to see activity pick up over the rest of the year, as business owners contemplate potential tax changes in the Autumn budget and they have had time to assess any impact from global tariffs.”