Despite uncertainty caused by Covid-19, economic and geopolitical factors, new analysis from KPMG has confirmed that mid-market private equity investment in the UK in 2021 soared to the highest level ever recorded.
Despite uncertainty caused by Covid-19, economic and geopolitical factors, new analysis from KPMG has confirmed that mid-market private equity investment in the UK in 2021 soared to the highest level ever recorded.
Both volumes and values saw a boost, as a total of 803 deals, worth GBP46.8 billion were completed in 2021 – an increase of 40 per cent and 36 per cent, respectively.
KPMG’s latest study also showed that while disruptions caused by the pandemic made 2020 an atypical year for dealmakers, the levels of activity seen in 2021 still surpassed pre-pandemic levels, with deal volumes up 20 per cent and deal values up 15 per cent, compared to 2019.
The UK’s private equity market overall also thrived with a total of 1,545 deals worth GBP159.2 billion completed in 2021, up from 1,117 in 2020 and 1,246 in 2019.
In line with the increase in values, KPMG’s research found that deal multiples rose across the UK private equity market, from 8.7x earnings in 2020 to 9.6x in 2021, while multiples in the mid-market remained fairly steady at 10.4x in 2021, versus 10.7x earnings in 2020.
The number of private equity exits fell from 178 in 2020 to 162 in 2021, although this still surpassed 2019 levels of exit activity. Deal values, however, increased by 13 per cent, from GBP13.6 billion to GBP15.4 billion.
Although deal volumes rose across all sectors, business services was the standout performer, with activity up from 215 deals in 2020 to 312 in 2021, and values rose by over 50 per cent to GBP15.5 billion, up from 2020’s GBP10 billion and GBP14 billion in 2019. The allure of TMT businesses also held strong as the effect of remote and hybrid working buoyed investment in the sector, with 2021 deals up by 55 per cent. In line with heightened activity in online retail and direct-to-consumer sales, consumer goods and retail, deal activity also saw an increase.
