2025 noticed levels of personal fairness subdued to their lowest worth in 5 years, in accordance to a brand new report. Nevertheless, in accordance to Grant Thornton, the brand new yr presents recent alternatives, with greater than two thirds of personal fairness gamers now planning to increase their investment levels.
As 2025 approached, M&A specialists appeared equipped for a bumper yr. After a dramatic slowing of the market, and sustained political uncertainty in the UK, a definitive election outcome and the readability it brough domestically noticed confidence rise amongst M&A professionals. And with Europe-wide IPO momentum ensuing in a spike in funding, coinciding with surveys exhibiting greater than two-thirds of mid-market enterprise house owners in Britain had been contemplating exiting their agency, the way forward for the offers market appeared comparatively vivid.
The yr commenced with a bang, however not the one which many individuals anticipated. With the chaos of the US authorities’s ‘Liberation Day’ tariffs, non-public fairness companies immediately noticed their enthusiasm cool – main to a sudden drop in each quantity and worth of offers they participated in. Neither stage totally recovered all year long.
Supply: Grant Thornton
Because of this UK non-public fairness offers fell by 9% yr on yr, to 1,722, in accordance to analysis from Grant Thornton. In the meantime the quantity spent by non-public fairness buyers dropped by slightly below £2 billion, to a mixed worth of £20.8 billion. Regardless of this efficiency, nonetheless, the analysts imagine higher occasions should still be on the horizon.
The shut to the yr was robust; exercise rose by 5% in the second half of the yr, in contrast to the primary six months. In accordance to Grant Thornton, this marked the busiest half-year since early 2022, excluding the 2024 Capital Positive factors Tax surge.
On this foundation, Pete Terry, head of personal fairness at Grant Thornton UK, deduced, “A robust capability to adapt made 2025 a good yr for PE dealmaking towards a troublesome market backdrop, together with tariff chaos, will-they-won’t-they Autumn Funds leaks and ongoing geopolitical turbulence. We anticipate 2026 to be busier as UK non-public fairness funds search to deploy a stockpile of dry powder, which the British Enterprise Capital Affiliation (BVCA) estimates at £190 billion.”
Supply: Grant Thornton
The extent to which this manifests might also hinge on what occurs with the US market, nonetheless, suggesting issues are removed from reduce and dry. Round 33% of UK non-public fairness offers in the primary 11 months of 2025 had US investor participation, in contrast to 23% in 2015. US funds are considering far more broadly about their international portfolio and are exhibiting higher curiosity in European property. Nevertheless, whereas that is pushed by diversification and sector-specific methods fairly than tariffs or forex shifts, the renewed risk of world commerce friction has widened valuation gaps, and made future exits extra advanced.
Terry added, “This has been additional unsettled by escalating tensions over Greenland, with Washington threatening extra tariffs on nations resisting its stance. As Europe prepares potential retaliatory measures, these geopolitical flashpoints have added one other layer of uncertainty for sponsors, lenders and consumers evaluating cross border offers.”
Differing priorities
That’s not the one space the place there’s nonetheless room for battle, although. 2026 version of the ‘Personal Fairness Pulse’ relies upon responses from 550 international PE leaders, lifting the lid on what common companions (GPs) are actually considering and exploring their expectations for the yr forward. The outcomes present that non-public fairness companies are specializing in execution, adapting to new calls for from restricted companions (LPs), exploring new fund constructions and sharpening sector specialisms.
To that finish, operational enhancements in portfolios drove essentially the most demand final yr in the UK – famous by 36% of respondents, in contrast to simply 20% in the remainder of the world. Wanting forward, this can be why attitudes to know-how fluctuate so drastically between samples.
A 72% majority of UK respondents see the know-how as ‘extra hype than influence’, and simply 26% of personal fairness companies there stated they anticipated the tech sector to present an important alternatives, in contrast to greater than 30% globally. As a substitute, UK respondents have a lot larger expectations of monetary companies – at 34%, in contrast to the worldwide common of slightly below 29%.
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