UK private equity interest in the Midlands dips in the first half of 2026 – report

Total private equity investment in the Midlands fell in the first half of this year, according to KPMG UK’s private equity pulse. 

The mid-year study into private equity deal activity found that private equity interest in the region declined by 10 per cent compared to H1 2025, with 87 deals completed.

Private equity exits in the region also decreased in H1 2026, with six transactions completed, a 68 per cent fall compared to H1 2025 (19 vs 6).

The findings reflect a backdrop of economic uncertainty, influenced by ongoing geopolitical developments and concerns surrounding the wider impact of AI across many sectors.

Bolt-ons remained the largest component of private equity activity across the Midlands, with 58 completed, making up 67 per cent of all deals. 

Traditional buyouts, including leveraged buyouts, were the second largest deal type with 15 deals (17 per cent), followed by minority stake deals, of which there were nine (10 per cent). 

Investment in the Midlands accounted for 10 per cent of the total new PE backing in the UK. Deal activity by volume increased across five UK regions in the first half of 2026 - the South East, South West & Wales, North West, Yorkshire and the North East – compared with the first half of 2025. 

Stuart Sewell (pictured), head of M&A for the Midlands at KPMG UK, said: “The last six months has seen private equity deal volumes reduce in the Midlands, as ongoing geopolitical tensions and uncertainty around the impact of AI on valuations make investors more cautious.

“But we’re still seeing resilience beneath the surface and it’s reassuring that the Midlands has maintained its position as the third largest regional hub for private equity investment after London and the North West.

“What remains encouraging is that the Midlands has a wealth of assets in sectors from industrials and manufacturing to professional services, as well as an active buyer audience that’s ready to invest.

“This positions the region well for an uptick in deal activity as confidence improves.”

Nationally, despite a reasonably strong start to the year, UK-wide private equity deal activity slowed in the first half of 2026.

The firm’s most recent M&A study revealed that deal volumes fell 3.4 per cent year on year, with a total of 888 deals closed throughout the first half of 2026, compared to 919 over the same period in 2025. The second quarter witnessed a sharper decline compared to Q1 as the conflict in Iran and concerns around the wider impact of AI put the brakes on activity across all private equity. Most deals took place in Q1 with 455 deals, while Q2 saw a 10 per cent decrease year on year.

Sector performance was mixed, with Healthcare - the only sector to see an increase in volumes, rising 9.3 per cent albeit from a low base.

While Business Services and Technology, Media and Telecoms (TMT) accounted for 64 per cent of all deals over the period, both saw falls of 5.9 per cent and 3.7 per cent respectively, with Consumer Goods and Retail experiencing the steepest decline at 17.2 per cent.

Commenting on the findings, Alex Hartley, head of corporate finance at KPMG UK, said: “While uncertainty caused by the conflict in Iran led many private equity houses to re-assess or delay deals, the defining feature of the market this year has been concern over AI’s impact on certain sectors.

“As dealmakers gain confidence around this and potential impacts on valuations, overall volumes should lift as the year progresses.

“But we will also see investors looking for assets that are less exposed to AI, with greater focus on blue collar services and industrials that offer secure, recurring revenues. 

“However, potential tax changes under new leadership in Government could dominate the market later this year, particularly if investors anticipate changes to capital gains tax. Any speculation could trigger a flurry of activity, as we saw at the end of 2024.”