Deals in the UK private equity market picked up in the final quarter of 2025, signalling renewed momentum for 2026, but that wasn’t enough to offset a slowdown in activity earlier in the year.

Analysis of PitchBook data by leading audit, tax and consulting firm RSM UK shows UK PE buyouts jumped 19% from 351 in Q3 2025 to 417 in Q4 2025, but were down 16% from 495 in the same quarter in 2024. The q/q increase was driven by professional and business services (up from 148 to 198), industrials (up from 45 to 60) and technology and media (up from 57 to 70). There was a total of 1,527 UK PE buyout deals in 2025, an 11% decrease from 1,713 in 2024.

Private equity activity continues to be driven by add-ons as a route for growth and value creation, increasing 18% from 257 in Q3 2025 to 302 in Q4 2025. However, add-ons remain below the same quarter in the previous year (361) and were down from 1,254 in 2024 to 1,087 in 2025.

Salik Chaturbhai, private equity analyst and financial modelling lead for PE at RSM UK, said: “The private equity market ended the year on a high, with Q4 emerging as the strongest quarter for buyout activity in 2025. The end of 2025 saw uncertainty surrounding the budget and tariffs dissipate, plus a further interest rate cut which gave PE activity a much-needed boost. As business and investor confidence returns, combined with UK policy reforms to accelerate pension capital deployment into private markets, PE is in a strong position for deal activity to pick up this year.

“Add-ons continue to dominate as the preferred route for growth, offering sponsors a lower-risk way to invest capital and build value through consolidation. 2025 was also the strongest year for corporate divestures as a theme within the PE buyout activity since 2021, as corporates let go of non-core assets to boost shareholder value and operational focus.

“US PE firms are increasingly looking to the UK due to intense competition and elevated valuations back at home. The UK remains a gateway for transatlantic deal flows, thanks to its transparent, well-regulated market with deep pools of management talent and a sophisticated legal framework. As a result, US investors are not just passively participating in UK PE deals but actively driving activity.”

Stuart Clowser, head of private equity at RSM UK, said: “This year is expected to be shaped by a focus on investor liquidity, through investment managers driving exits due to extended hold periods. With dry powder still near record highs, and momentum building in Q4 2025 for exits, 2026 is expected to be dominated by sponsor-to-sponsor transactions and secondaries. Fundraising has been challenging in the middle market with investors focusing on distributions to paid-in-capital (DPI) – the amount of capital returned to investors relative to the amount invested. The increased liquidity is expected to be followed by improvements in the mid-market fundraising environment.”

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