Pandemic leads to 41% drop in volume of North West mid-market private equity deals

Jonathan Boyers

The number of mid-market private equity deals completed in the North West fell by more 41% in 2020 as COVID-19 closed vast sections of the economy for prolonged periods, according to KPMG’s latest study of UK transactions involving private equity investors.

The study, which covers the broader private equity market with a particular focus on the mid-market segment, reports that 54 deals completed in the region over the course of 2020, with a combined value of £3.4bn, down 42% from the £5.8bn recorded in 2019.

The North West is home to in excess of 25 private equity houses, more than any other UK region except London, with deals done still making up 12% of the UK’s completed deals in 2020, despite the drop.

In terms of the trend over the course of the year, deal activity started strongly in 2020, with 20 deals completed in the first quarter.

The second quarter witnessed a sharp – if anticipated – decline as the pandemic shuttered the economy with just nine deals completed.

Activity then picked up markedly in the third and fourth quarters, with 14 and 11 deals successfully completed, respectively.

Jonathan Boyers, based in Manchester and head of M&A for KPMG in the UK, said: “Given the strength of the North West’s private equity market this data provides a bellwether of the health of the sector across the country.

“COVID-19 clearly impacted deal activity throughout the year, but we’re confident that the underlying focus of private equity investment in the region, strong liquidity to tap into and the resilience of businesses across the region will kick-start deal making again in 2021.”

Nationally, mid-market PE deals were particularly impacted by the challenges brought about by the COVID-19 pandemic, with both volumes and values falling by a third on the previous year. In total, 452 mid-market transactions completed nationally during the year, with a combined value of £28.5bn.

However, while total annual deal volumes were ultimately hampered by the decline seen in the second quarter, there was a clear bounce-back in national activity in quarters three and four. Deals that had been put on hold sprung back to life, with PE investors, still sitting on substantial reserves of capital, mobilised once more, resulting in more than two hundred transactions completing nationally in the final six months of the year.

Click here for a comprehensive list of West Midlands deals >
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