UK public markets remain popular for private capital, with a slight shift last year towards the smaller and mid-cap companies. There is a sense that the current geopolitical environment caused some hesitation on the part of private equity-backed bidders to strike deals towards the latter part of 2025, however, with inflation better under control and further interest rate cuts possible, we are optimistic about deal activity levels in 2026.
The number of firm offers backed by private equity was slightly higher than in 2024, with 26 (46%) firm offers in 2025, up from 24 (43%) firm offers in 2024. However, these levels are still lower than those seen in 2023, which saw 36 of the 57 (63%) firm offers backed by private equity. 20 of these 26 (77%) firm offers were all-cash offers, with the remaining six utilising a mixture of cash, loan notes, unlisted securities alternatives and CVRs.
Despite the increase in the overall number of private equity-backed offers, such deals saw less high-value offers this year, with only five (19%) of the offers having a deal value of over £1 billion, down from eight (33%) in 2024.
The slight lessening of interest from private capital may in part be due to challenging valuations leading to increased competition from strategic bidders, who may be more willing to take on contested offers with the hope of cost synergies. Private equity bidders were involved in each of the five firm competing offers seen in 2025, and we saw private equity bidders go against a strategic bidder in the offer for Assura plc and against another private equity bidder in the offer for Spectris plc.
The shift towards smaller and mid-cap deals may also be reflective of a tighter focus on value-creation, where the small and mid-cap UK public assets (which are perceived to be undervalued) present a more attractive investment opportunity. Smaller deals may also be seen as easier to execute in the hopes of avoiding complex regulatory issues.
Whilst geopolitical risks remain, private equity funds continue to have a significant amount of dry powder as we move into 2026, which we saw being deployed in private assets in H2. Combined with the more favourable financing conditions, UK public assets should therefore continue to present an attractive investment opportunity for private equity bidders.
