UK transactions involving mid-market private equity investors in the North West of England declined in the first half of 2024, as challenging macroeconomic conditions continued, new analysis from KPMG UK has revealed.
The firm’s latest Mid-Market Private Equity study, which tracks deal flow and sentiment, shows that 35 deals were completed in the North West in the first half of 2024, reflecting a drop in volume of almost 13 per cent compared to the 40 deals completed during the same period in 2023.
However, the deals completed remained consistent with H2 2023 (35). Against pre-pandemic M&A activity (H1 2019), 2024’s figure reflects an increase in activity of 25% suggesting the market has begun to normalise.
In terms of the proportion of deals completed in the region compared to the rest of the country, the North West accounted for 10.9 per cent of all deals taking place in the first half of this year, a slight reduction from 11.1 per cent in H1 2023.
Despite this, the region still attracted the largest number of investments outside of the London region which accounted for 47 per cent of mid-market deals in the first six months of the year.
Nationally, mid-market private equity investment activity in the UK declined by 11 per cent in the first half of 2024.
321 mid-market transactions were completed during the first six months of the year, representing a drop of 11 per cent when compared to 360 transactions completed during the same period in 2023. However, against pre-pandemic M&A activity (H1 2019), 2024’s figure reflects an increase in activity of 25 per cent.
It was a similar picture for the UK private equity market overall, with 656 deals completed during H1 2024, down 20 per cent when compared to 822 transactions in H1 2023.
UK companies continued to remain attractive to international buyers, with inbound deals accounting for 42 per cent of all M&A activity during the first half of 2024 – and almost half of those buyers were US-based.
Commenting on the findings, 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.”