Total private equity investment activity in London fell in 2025, according to the latest UK Private Equity Review from KPMG UK.
The comprehensive annual study into private equity deal activity found that 779 transactions were completed in the capital last year, a fall of 11% year-on-year. According to the report, London and wider UK market confidence was affected by geopolitical tensions, tariff uncertainty and ongoing economic challenges throughout 2025.
London deal activity was stronger in the first half of 2025, with 405 transactions completed, compared to 374 deals in the second half.
Private equity exits also decreased in 2025, compared to the year before (115 vs 154). Exit activity accelerated over the course of 2025, however, with a total of 66 exits completed in the second half of 2025, compared with 49 in the first half.
Bolt-ons remained the most common deal type year-on-year, with 426 completed, as investors looked to build scale in their existing platforms. This was followed by minority investments, of which 160 were completed last year across the region.
London’s private equity interest accounted for 44% of the total PE backing in the UK.
Helen Roxburgh, Corporate Finance Partner and Head of M&A for London at KPMG UK, said: “London’s private equity market navigated a challenging 2025 – as was the case for M&A across the country – as ongoing geopolitical tensions and economic uncertainty made investors more selective and stretched deal timelines.
“But despite these broader headwinds, the capital’s international appeal and concentration of high-growth, innovation-led businesses supported private equity activity that accounted for almost half of UK private equity deals. The popularity of bolt-ons also showed investors focused on strengthening existing portfolio companies and delivering growth through targeted, strategic acquisitions.
“Improved exit momentum throughout the year should help to rebuild confidence as we move through 2026. Combined with record levels of dry powder and London’s deep pool of talent and advisory expertise, the city is well placed to benefit as investors look to deploy capital and realise their investments in the year ahead.”
The national outlook
The review found that 1,751 deal transactions were completed in 2025, a fall of 10% year on year. While overall volumes recorded were lower than the post covid rebound in 2021 and 2022, they remain significantly higher than the average recorded in the years immediately prior to covid.[i]
More deals completed in the first half of the year, with 881 transactions in the first six months of 2025. Bolt-ons remained the most common deal type, making up 59% of overall deals, as investors looked to build scale in their existing platforms, however bolt on volumes were 5% lower than their historical average. The volume of buyouts surged to their highest level since 2021 (298 reported deals).
Confidence expected to return in 2026
UK private equity activity is expected to pick up in 2026, helped by record levels of available capital, more businesses coming to market, and a renewed focus on improving how companies operate, with increased demand for related financial services such as currency exchange Hove.
There is also growing interest in sectors such as defence‑related industries and AI‑enabled business models, where investors see long‑term growth potential.
Commenting on the findings, Alex Hartley, Head of Corporate Finance at KPMG UK, said: “Market and investor confidence continued to suffer setbacks through 2025 as geo-political events created several uncertainties for businesses to navigate, making it a tough year to get deals done. There was plenty of ambition and significant capital to deploy but the bar was set high with a strong focus on businesses and sectors that could trade resiliently in this environment.
“Bolt‑ons continued to be a go‑to way for investors to grow their portfolios, but we did also see a rise in buyouts as investors sought to back new platforms.”
“After some of the difficulties of 2025, we have seen activity start to show signs of recovery in 2026. While there are still challenges to navigate, investors are focused on coming out of the blocks strongly this year as they look to deploy capital and realise some of their investments”