Budget drives uptick in PE deals, but outlook remains uncertain

UK private equity (PE) buyouts increased for the third consecutive quarter in Q4 2024, with the Budget being a catalyst for investors to get deals over the line after extended hold periods, according to leading audit, tax and consulting firm 91探花.

Hold periods have extended while investors waited for the performance of portfolio companies to return to previously forecast levels. However, the outlook for the PE market remains uncertain with inflation, interest rates and increasing volatility in financial markets, feeling the impact of geopolitical changes and global conflicts.

The number of PE buyouts in the UK increased from 411 in Q3 2024 to 433 in Q4 2024, and on an annual basis, UK PE deal count rose from 1,391 in 2023 to 1,571 in 2024*. Similarly, PE buyouts in the US were up from 6,397 in 2023 to 6,548 in 2024, and from 5,921 to 6,223 in Europe.

Stuart Clowser, partner and head of private equity at 91探花, comments: “It’s encouraging to see PE deal activity continued its upward trend in Q4 2024, with extended hold periods, performance of businesses now above pre-pandemic levels, and the Autumn Budget likely being the catalysts for increased exits. Deal activity in the UK and US is now above pre-pandemic levels, after investors had been cautious in recent years due to spikes in inflation and high interest rates, which damaged confidence and bumped up the cost of capital. 

“This positive sentiment looks set to continue, with more deals underway and the deal pipeline building well so far in 2025. However, concerns over global conflicts, potential tariffs and inflation not maintaining its 2% target, means there’s a risk the constant barrage of uncertainty could spook investors.

“The direction of travel for interest rates, plus any further shocks to the economy, could hamper recovery, which PE firms will be keeping a close eye on. The latest data demonstrates room for positivity with the number of new deals coming to market, and specific industries like technology and financial services outperforming pre-pandemic levels, combined with the planned investment in technology and defence by government."

*PitchBook Data Inc., 91探花 – as of 31 December 2024.