PE deals stall amid geopolitical tensions but mid market stays resilient
The value of PE exits in the UK surged to their highest in two and a half years, but PE deals overall slowed in Q1 2026, similarly to Q1 2025, according to analysis of PitchBook data by leading audit, tax and consulting firm RSM UK.
There are pockets of resilience in the PE market, with encouraging signs for UK private market liquidity. UK PE exits reached €26.1bn in value in Q1 2026, their highest since Q3 2023. In addition, dry powder increased to £145bn in the UK and fundraising in the European mid-market continues to lead the way, accounting for more than two-thirds of capital raised in Q1.
That said, UK PE buyouts fell from 461 deals in Q4 2025 to 352 in Q1 2026, but were only down 3.8% year-on-year from 366 in Q1 2025. Bolt-on transactions accounted for 75% of the PE buyouts. Healthcare was the only industry that saw an increase in PE buyouts, up 5% from Q4 2025 and 11% from same period last year, while all other industries declined.
Salik Chaturbhai, Private Equity Analyst and Financial Modelling Lead for PE at RSM UK, said: “Despite a slowdown in private equity activity in the UK at the start of the year, there are opportunities to be had, with bolt-on activity being the key focus and fundraising in the mid market surging ahead in Europe.
“Exits will be a key focus for many PE funds for the rest of 2026, which is expected to continue into 2027. The number is still relatively low, but bigger, better deals are happening, with the value of exits in the UK having its strongest quarter in two and a half years. High levels of dry powder and extended hold periods mean the pressure is on for investment managers to push ahead with exits this year and distribute capital back to LPs.”
Stuart Clowser, Head of Private Equity at RSM UK, said: “The Middle East conflict is causing certain private equity deals to stall, as investment committees apply caution to industries that are particularly vulnerable to rising inflation and energy prices. For the most part, PE firms are prioritising the impact of the rapid technological changes as a heightened risk, while firms navigate the noise and move forward with their investment plans. In a low liquidity, high risk and uncertain environment, the importance of generating liquidity is still a major priority for investors.”