South West private equity activity cools as market volatility bites – KPMG

By Peter Davison

24 August 2023

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KPMG Bristol

UK transactions involving mid-market private equity investors in the South West of England cooled in the first half of 2023 amid market volatility and tough trading conditions, new analysis from Big Four accounting firm KPMG has revealed.

The firm’s latest Mid-Market Private Equity study, which tracks deal flow and sentiment, shows that 18 deals worth £1.54 billion were completed in the South West in H1 2023, reflecting a drop in volume of 14 per cent when compared to the same period in 2022.

In terms of the proportion of deals completed in the region, the South West accounted for over 5.5 per cent of all deals taking place in H1 2023, a figure that is broadly comparable to the 5.6 per cent recorded in H1 2022.

On a national level, the mid-market report revealed that 327 deals worth £32 billion were completed in H1 2023, a reduction in volume of 12 per cent when compared with the same period in 2022.

For the overall private equity market, however, more clouds appeared on the horizon as 689 deals worth £70 billion were completed in the first half of the year, compared to 909 deals completed in H1 2022.

John Levis, corporate finance director at KPMG in Bristol, said: “Mid-market private equity deal momentum in the South West eased off in the first half of this year, as high inflation and rising interest rates, together with geopolitical uncertainty, continued to erode confidence and impact deal volumes.

“While deal volumes are down, the level of activity seen in H1 2023 remains on a par with pre-Covid levels. Deals are still getting done but, outside of the premium assets, are generally taking longer to complete.

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"It’s encouraging to see the South West region held firm in the terms of the ratio of deals completed on patch, reflecting the resilience and durability of the local dealmaking community.

“The South West region houses some fantastic businesses and has a highly skilled advisor community, so it’s encouraging to see the region hold its position in the national picture.

"Looking to the future the building blocks for dealmaking are already in place, and as greater economic, political, and financial stability beings to return, it won’t be long before the M&A tap is turned back on.”

By Peter Davison

Peter Davison is deputy editor of The Business Magazine. He has spent his life in journalism – doing work experience in newsrooms in and around Bristol while still at school, and landing his first job on a local newspaper aged 19. By 28 he was the youngest newspaper editor in the country.

An early advocate of online news, he spent the first years of the 2000s telling his bosses that the internet posed both the biggest opportunity and greatest threat to the newspaper industry and the art of journalism. He was right on both counts.

Since 2006 he has enjoyed a career as a freelance journalist. He lives in rural Wiltshire with one wife, two children, and three cats.