UK sponsor-backed financing activity experienced a modest slowdown in Q3 2024, as ongoing M&A sluggishness and seasonal dynamics impacted deal flow, according to the latest data from global investment bank, Houlihan Lokey.
With 49 transactions completed during the period, the report reveals there was an 11% decrease in UK mid-cap deals compared to Q2 2024 (55 transactions). However, year-to-date activity remained stable, showing a modest 1% increase compared to the same period in 2023.
The data also highlights the continued dominance of credit funds in the UK financing market, which now account for a commanding 73% of year-to-date transactions, compared to just 27% for banks. This marks a notable reversal from last year, when banks expanded their market share, completing 34% of deals in FY23 versus the 27% they hold this year. This shift reflects a resurgence in appetite from credit funds, which have regained confidence and a stronger foothold in the market following a challenging 2023.
New leveraged buyout (LBO) financings remained the key driver of UK deal activity, representing 40% of year-to-date transactions—a reflection of a slight rebound in M&A activity compared to last year. Add-on financings also represented a significant share, making up 36% of total deals, while refinancings comprised just 24% year-to-date. Improving debt market conditions are expected to support a rise in the share of refinancing activity in the coming quarters, as borrowers seek to capitalise on the increasing availability of capital.
