The UK continues to be an open and sophisticated M&A market, appealing to global buyers—particularly U.S. firms familiar with the environment. While valuation dislocation is often debated, boards remain focused on fundamentals and fiduciary duties, with recent deals showing strong premiums, sometimes approaching 100%, as sponsors and strategics compete for quality assets.

Competition among lenders has made financing abundant and attractive, with strong commercial terms and pricing. Corporates, having deleveraged in recent years, are well-positioned for growth and increasingly seeking proactive, committed facilities to move quickly on acquisitions. This underscores M&A’s strategic importance, with debt continuing to play a key role as a non-dilutive option.

Large corporates are increasingly focused on portfolio optimisation, leading to more carve-outs as they shed non-core assets to free up capital. This trend spans multiple sectors—including consumer—where broad portfolios offer significant scope for divestitures. Take-privates are also prompting ownership structure reviews, reinforcing the momentum behind carve-out transactions.

Top-tier assets attract strong demand, while mid-tier businesses are often held or moved into continuation vehicles. Meanwhile, the market for complex or “problem” assets is highly liquid, as sponsors and corporates address issues long deferred during years of easy financing. This dynamic underscores the resilience of private equity portfolios, with many funds holding fundamentally strong assets despite challenging conditions.

Fixed-term fund structures and disciplined pacing allow sponsors to keep deploying capital even in uncertain markets. While caution is warranted, investors expect GPs to find opportunities and create value—often through more aggressive post-investment strategies like buy-and-build and operational enhancements. Rather than sitting out, firms are leaning on experience and purposeful execution to deliver returns.

Imogen notes a growing preference among global LPs—particularly Canadian and Chinese investors—for European private equity over US markets amid geopolitical uncertainty. This trend is fuelling interest in the UK’s mid-market and lower mid-market segments, which consistently outperform large-cap deals reliant on financial engineering. With strong track records and deep expertise, UK managers are well-positioned to capitalize on this shift.