The volume of mid-market private equity deals in the North West fell in the first half of the year – but analysts at KMPG say they are confident the market will rebound thanks to its “strong fundamentals”.
KPMG’s latest Mid-Market Private Equity study, which tracks deal flow and sentiment, showed 35 deals were completed in the North West in the first half of 2024, down on the 40 deals completed during the same period in 2023 though consistent with the 35 recorded in the second half of 2023.
That second half figure also reflects a 25% increase on H1 2019.
The North West accounted for 10.9% of all UK deals taking place in the first half of this year, a slight reduction from 11.1% in 2023.It still attracted the biggest number of investments outside London.
UK-wide, mid-market PE investment activity in the UK fell by 11% in the first half of 2024.
KPMG said UK companies remained attractive to international buyers, with inbound deals accounting for 42% of all M&A activity in the first half – with almost half of those buyers from the USA.
Richard Stark, head of private equity in the north at KPMG UK, said: “Despite a slower start to the year, we’re optimistic that with greater economic and political stability, there are strong fundamentals for the M&A market in the North West to return to healthier levels of activity. Both private equity firms and lenders are back in the market looking to complete transactions, albeit the quality threshold for doing deals remains high.
“Our own pipeline in the North West going into the summer is strong, and we’re seeing a greater appetite for transactions, with a notable resurgence of deals across the financial services, business services, industrials and technology, media and telecommunications sectors. There’s also growing interest in consumer businesses, aided by improving consumer confidence.
“Looking ahead to the remainder of 2024, after a prolonged period of uncertainty, investors will now be looking at the UK as a more stable environment for investing into new businesses and realising portfolio assets. The focus on deploying capital is here to stay, as many private equity firms are sat on significant amounts of dry powder.
“Ultimately, the foundations needed for dealmaking have significantly improved over the last few months, and we expect activity levels in the North West will continue to rise in the second half of 2024.”
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