UK M&A transactions involving mid-market private equity investors cooled in the first six months of 2023 amid ongoing market volatility and tough trading conditions, according to analysis in a new report from KPMG UK.
The firm’s latest Mid-Market Private Equity study shows that 327 deals worth £32bn were completed in H1 2023, reflecting a drop in volume of 12% when compared with the same period in 2022.
For the overall private equity market, however, more clouds appeared on the horizon as 689 deals worth £70bn were completed in the first half of the year, compared to 909 deals completed in H1 2022.
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.
Rob Baxter, Head of Corporate Finance at KPMG UK, said: “The number of private equity exits in the first half of the year remained low yet again, but pressure is building on this front, so it’s just a matter of time until we see an eventual uptick in exits.
“Ultimately, the building blocks needed for dealmaking are already in place, and as greater economic, political and financial stability begins to return, it won’t be long before the M&A tap is turned back on.”
