The headline for private equity (PE) in 2023 sounds simple: deal volumes were down and deals were harder to complete, but that belies the true trajectory. A detailed analysis of quarter-on-quarter activity from late 2022 through Q4 2023 reveals a more complex landscape.*

Political and economic uncertainty in late 2022 and early 2023 did compel PE funds to delay investment decisions until summer 2023, resulting in a fallow period between Q4 2022 and Q2 2023, but this trend changed in the third and fourth quarter of the year. Deal closures rose significantly month on month and culminated in a brilliant run in the second half.

How did private equity M&A play out?

In 2023 total UK deal volume fell 13% on 2022 to 1,497, for £10 million to £500 million enterprise value (EV) deals, including transactions where size isn’t disclosed. This was a clear acceleration of the 10% decline in 2022 on 2021. The data shows a slowing decline for buyouts and development capital in 2023, with only a 9% decline, after a 23% fall in 2022, but it was a challenging year for bolt-ons,  which fell 15%: down to 893 from 1049.

The year opened with pressure to close deals after relatively slow activity in latter period of 2022, but ongoing economic challenges drove continued hesitancy to close deals in the first half. This was mitigated by a surge of completions in Q3, although this wasn’t sustained in Q4 as investors preferred to wait for more certainty on the economy.

Total deal volumes in Q4 2023 were down around 10% on Q4 2022, but still significantly below Q4 2021, although that year was probably an outlier.

*All data sourced from PitchBook Data, Inc

Total UK PE buyout value and volume – excluding bolt-ons

Total UK PE buyout value and volume – excluding bolt-ons graph

The increase in buyout and development capital deals in Q3 2023 also wasn’t sustained, with a 4% decline. Bolt-ons also dropped 17% on Q4 2022 (down to 201 from 243).


Total UK PE buyout volumes (top 10 industry groups) – including bolt-ons

Chart depicting the total UK PE buyout volumes (top 10 industry groups) – including bolt-ons


Total UK PE buyout volumes (top 10 industry groups) – excluding bolt-ons

Chart depicting the total UK PE buyout volumes (top 10 industry groups) – excluding bolt-ons


This approach reflected PE investors’ general aversion to uncertainty, arguably the only constant economic trend in 2023: inflation, rising interest rates, and geopolitical tensions. Caution was apparent in valuations, a departure from the bold strategies of previous years, and deals were structured to mitigate risk in a fluctuating market. Bolt-ons, which held up well in 2022 as investors sought to navigate the increasingly challenging economic backdrop, had a tougher 2023. The legacy of political uncertainty in 2022 diminished LP investor confidence, although specialised strategies focused on growth, distress, or special situations fared better in closing funds. Interest rates rises in response to high inflation in 2023 also impacted the PE industry and the market is still adjusting to this.

In most sectors this meant valuations were affected, with processes delayed or pulled back altogether. There was also a growing discrepancy in price expectations – sellers expecting historic pre-2022 valuations and buyers unwilling to pay due to the high cost of financing – that subdued deal activity. 

“The secondary market was significantly impacted and PE has been fairly conservative in deploying capital and engaging in fewer buyouts, while there’s been more interest in corporate or trade sales as a preferred exit strategy that also explores other routes, including employee ownership trusts (EOTs), for example the sale of Churchill Group to an EOT provided an exit for the incumbent PE house, Soho Square, advised by Grant Thornton.”

Humza Khan, Associate Director, Private Equity Coverage


Exit strategies

The uncertainty on deal values means that corporate finance advisors are hedging their bets even when there’s a clear route to exit, through trade or PE deals, including more dual track processes to test both markets. The challenge when someone wants to sell a business or raise capital is that people assume that this approach is happening because the initial process didn’t go well, so if it fails people assume that the asset is tainted. Thus, price discovery is much more critical now. Two years ago there might have been greater willingness for investors to take risks.

Mainstream PE has also been augmented by a broader base to enable a more creative approach to sourcing capital: deal-by-deal investors, family offices, LP investors going direct, or investors coming in from different jurisdictions.  

The reduction in deal volumes, however, did enable investors to spend their time exploring new strategies to unlock and structure transactions, such as off-market approaches and bilateral deals, that wouldn’t have happened if the market was as strong as it was in 2021 or the first half of 2022.

The lenders’ view

"2023 opened with some of the most challenging conditions seen in the UK debt markets in recent years: high inflation, margin pressure, anaemic growth, rising interest rates, and a fundamental lack of confidence in the economy. Lenders’ concerns over profitability and cash generation were multiplied when allied with higher debt service due to the Bank of England (BoE) Base Rate and SONIA levels. However, sentiment started to improve through Q2, supported by better data from borrowers as to trading performance and, as lender appetite began to return, borrowers’ confidence in pursuing a refinancing increased.

This momentum built further as inflation finally began to reduce materially towards the end of 2023. While no cuts had been made to the BoE Base Rate by January 2024, and have been flagged by the BoE as some distance off, market expectation is for two or three cuts before the year-end, with more to follow in 2025. So, while borrowing costs remain high, we’re seeing cautious optimism from borrowers as to refinancing processes."

George Fieldhouse, Partner, Head of CFA Debt Advisory

Report from the American market

“PE deal activity in the US during 2023 fell to its lowest point since 2016, based on PitchBook data. This was driven primarily by the lowest level of exits during the past decade, and buying volume in 2023 was also significantly depressed relative to the levels in 2021 and 2022. However, many are cautiously optimistic about U.S. PE picking up in 2024 because of greater certainty around the interest rate path, as well as the potential for a decline in rates. Sellers’ expectations have also become more realistic based on current market conditions and the IPO market is expected to thaw. This should lead to an increase in buying activity and exits, respectively.”

Greg Westfall, National Managing Principal – Private Equity, Grant Thornton US

Highest-value deals (disclosed value to £500 million)

Statera Energy (£492.5 million)

Definitive agreement to be acquired by EQT

Impellam Group (£480.6 million)

Definitive agreement to be acquired by HeadFirst, via financial sponsors: IceLake Capital and Kartesia

Gresham House Asset Management (£467.5 million)

Acquired by Searchlight Capital Partners through LBO

Sector spotlights

Activity varied between sectors: tech and business services remained strong, with financial services up and healthcare buoyant in spite of a decline on the high volumes of 2021 and 2022. Consumer markets struggled in the context of the cost of living crisis, turning sentiment against discretionary products and services. In contrast to this, B2B products and services was the most active sector for PE investors in 2023.

Total UK PE buyout volumes by industry sector – including bolt-ons

Chart depicting the total UK PE buyout volumes by industry sector – including bolt-ons 

B2B products and services 

Total volume: 588 (39% deals)

 71% of B2B deals involve services companies, so the 1% decrease in activity is a striking contrast to the substantial fall in B2C deals. This was the most active sector for PE activity, accounting for 39% of all deals (up from 36% in 2022). Exits were around 30%, the largest decline on 2022 in the market.

Highest-value deals (disclosed value to £500 million)

Impellam Group (£480.6 million)

Definitive agreement to be acquired by HeadFirst, via financial sponsors: IceLake Capital and Kartesia

Mobile Mini UK (£405.2 million)

Acquired by Modulaire through its financial sponsor: Brookfield Asset Management

Chambers and Partners (£390.8 million)

Acquired by ABRY Partners through LBO 

Information technology 

Total volume: 271 (14% deals)

Overall deal volumes were down 23% in 2023, with software (57% of all IT deals in 2023) down 18% and IT services (29% of IT deals) down 25%. Buyouts outperformed bolt-ons, with volumes down 17% and 27% respectively year-on-year, and early signs of a sustained return to growth in the H2 buyout market was also evident, with volumes up 25% on H1. 

This suggests that investors have a stronger appetite for new tech businesses over established platforms and bolt-ons. This sector also saw the lowest volume of exits: 5%.

Highest-value deals (disclosed value to £500 million)

Commify (£259.3 million)

Acquired by ECI Partners through LBO

Kin+Carta (£204.2 million)

Definitive agreement to be acquired by Apax Partners through LBO

Instem (£199 million)

Acquired by ArchiMed through a public-to-private LBO

B2C products and services

Total volume: 234 (16% deals)

Services make up around 40% of all B2C deals, but it looks like the cost of living crisis is making investment in companies providing discretionary services less attractive. Overall B2C volumes were down 20%, but services volumes were down 38%.

Highest-value deals (disclosed value to £500 million)

Tusker (£302.3 million)

Acquired by Lloyds Banking Group through LBO

Matalan Retail (£244.8 million)

Acquired by Invesco, Napier Park Global Capital, Tresidor Investment Management, and Man GLG for debt-to-equity conversion

Finsbury Food Group (£151.1 million)

Definitive agreement to be acquired by DBAY Advisors through public-to-private LBO

Financial services

Total volume: 217 (14% deals)

The striking trend in financial services was the stronger performance of bolt-on activity in contrast to the wider market. Bolt-on volumes were up 32% to 148 deals in 2023, with this improvement driven almost entirely by the insurance sector, where volumes increased 73% to 69. This contrasts starkly with buyouts, with insurance volumes down 11% against a market that fell 13% overall.

Highest-value deals (disclosed value to £500 million)

Gresham House Asset Management (£467.5 million)

Acquired by Searchlight Capital Partners through LBO

Absolute Energy Capital (£351 million)

Definitive agreement to be acquired by I Squared Capital through LBO

Curtis Banks (£248.2 million)

Acquired by Nucleus Financial, via financial sponsors: HPS Investment Partners and Epiris, through public-to-private LBO


Total volume: 101 (7% deals)

Deals in this sector were driven by bolt-ons, which made up 66% of the volume. Healthcare services was the key sector, accounting for around 62% of all deals. This means that the 38% drop on 2022 in this sector (down to 58 from 98) was key to the overall reduction in healthcare activity.

Highest-value deals (disclosed value to £500 million)

Medica Group (£267.5 million)

Acquired by IK Partners through £269 million public-to-private LBO

Medinet (£197.7 million)

Acquired by Fremman Capital through LBO

4Ways (£192.8 million)

Acquired by Blikk Holding, via its financial sponsors: M4 Capital, EQT, and Deutsche Beteiligungs.

The outlook for 2024

The general sentiment for the year ahead is optimistic, with an expectation that PE activity will pick up momentum in the coming months. Some key issues from 2023 are likely to carry over, but the next 12 months should be busier.

“The rare occurrence of a UK general election in the same year as the US presidential vote may induce a period of uncertainty and speculation about their economic implications, but confidence is still higher than 2022 and the potential for post-election tax changes could also encourage more deal activity.” 
Humza Khan

The reality is that PE need to do deals and the pressure after a slow year will only increase. Investors who successfully raised capital in 2023 should also have funds available now that they have the confidence to spend it. It’s also likely that the interest in bilateral deals and off-market opportunities will continue in 2024, although some acquisitions will undoubtedly be distress deals.

Longer hold-periods because of the market environment for the last 18 months that has increased the number of bolt-ons also means that there will probably be more platform exits this year. Portfolio companies are likely to receive more attention through value creation, particularly around ESG and AI. ESG is particularly attractive for investors because of globally increasing regulation and the continued pressure from stakeholders – employees, customers, or investors – to ensure the companies they work for or interact with are ethically sound and have sustainability in their DNA. It should remain a hot sector in the year ahead. Everyone is still adjusting to the emergence of AI, but it will surely be another driver of change.

PE consistently outperforms the stock market and other asset categories to deliver higher returns, and that should continue in 2024.

For more insight and guidance, get in touch with Mo MeraliKeely Woodley, or Humza Khan.