After a year of caution, private equity has started to regain momentum. The first half of 2026 has brought greater confidence, increased transaction activity and fresh opportunities for investors, while still demanding careful execution and clear value creation strategies. Our Private Equity mid-market review explores the trends emerging from the deals we have advised on and what they tell us about the direction of the market.

A Market Reset: Selectivity, Liquidity Innovation, and Value Creation

H1 2026 marked a clear inflection point. After a quieter 2025, momentum is returning as financing conditions improve and deal confidence rebuilds. The market is being shaped by targeted capital deployment, pressure to unlock liquidity and a sharper focus on operational value creation.

For investors and management teams, the emphasis has shifted from financial engineering to execution: scaling platforms, improving efficiency and building resilience in a more selective market.

Deal Activity: Stabilisation with Continued Discipline

Whilst momentum is returning, activity remains measured.

• Investors are prioritising high-quality assets with defensible market positions and strong cashflows
• Valuation sensitivity persists, particularly in sectors exposed to macro volatility
• The mid-market has emerged as the most active segment, offering an attractive balance of scalability and execution risk both to UK and overseas acquirers
• High value strategic sponsor backed deals continue

For portfolio companies, this reinforces the need for clear equity stories, credible growth levers and evidence of resilient performance.

Buy-and-Build: The Primary Growth Engine

Buy-and-build remains central to capital deployment, with add-on acquisitions dominating deal flow across UK and overseas-backed groups.

• Sponsors are increasingly leveraging platform investments to consolidate fragmented markets
• Add-ons offer lower-risk deployment, faster execution, and clearer synergy pathways
• Sectors such as financial services, technology and industrials remain key consolidation plays

Management teams therefore need M&A readiness, integration capability and operating models that can scale without eroding value.

Exit Environment: Liquidity Returns, but Structures Evolve

Exit activity has improved as sponsors seek to return capital and manage ageing assets, but the routes to liquidity continue to evolve:

• Secondary buyouts now dominate, reflecting continued IPO market constraints
• Continuation vehicles and structured liquidity solutions are increasingly common
• Holding periods have lengthened, increasing pressure to deliver tangible value creation prior to exit

Investors need to underwrite exits with greater flexibility, while portfolio companies should prepare for multiple routes, including sponsor-to-sponsor transactions.

Capital Dynamics: Dry Powder vs Deployment Reality

Significant dry powder continues to underpin the market, but deployment remains selective.

• Investors face pressure to deploy capital, yet remain cautious on pricing and risk
• LP constraints are driving greater scrutiny on new commitments and performance
• The result is a market defined by capital abundance but execution discipline

This creates opportunity for businesses able to demonstrate resilience, scalability and credible paths to value realisation.

Sector Focus: Thematic Investing Takes Hold

Investment activity is increasingly aligned to long-term structural trends:

• Food & Drink – driven by defensive demand, structural consumer shifts and operational opportunities
• Manufacturing & Logistics – driven by operationally improvable industrial assets
• Defence – supported by increased government spending
• Technology – driven by demand and the ongoing evolution/adoption of AI
• Energy Transition – driven by regulatory and sustainability priorities

Capital is flowing toward businesses that can demonstrate strategic relevance within these sectors. They remain areas of focus and activity for us — see Section 5 for selected deals in each priority sector.

Financing and Macro: Improving but Not Frictionless

The financing backdrop has improved, supporting activity, but friction remains:

• Interest rates have stabilised, easing debt structuring
• Inflation moderation has supported confidence
• the US:GBP exchange rate remains favourable for US investors
• However, lenders remain highly selective, favouring strong credit profiles and predictable cashflows

The result is a continued flight to quality across both new investments and portfolio management.

If those conditions hold, there is every chance that the second half of 2026 will build on the momentum we’ve seen so far. Our Private Equity Mid-Market Review explores the trends shaping the market in more detail.

Download the report here.