The evolution of investment: UK private equity report 2026

Technology plays a dual role in 2026:

Firms are using AI to speed up sourcing, screening and monitoring. Portfolio companies are using it to improve forecasting, productivity and pricing. Technology can shift a company into a sector with higher multiples, transforming valuation potential.

“If you can change how the business is run, you can move to a sector that's got a higher multiple. Tech is a really good example: I've seen that using apps in recruitment – you move from being a people business to a people-and-tech business, with a higher multiple.”

Gareth Jones Gareth Jones Head of Growth: Mid-Market and Private Client, Forvis Mazars

Costs are higher, deal volumes are slower, trading conditions are challenging and geopolitics continues to add uncertainty. Firms are becoming more careful about where and how they deploy capital.

Financing conditions continue to play a pivotal role in UK PE activity: 59% say buy and build strategies are affected by financing issues. Majority Active funds employ more leverage (48% vs. 34%) reflecting the confidence from their proximity to management teams and operational performance.

These constraints are leading firms to:

• Use lower gearing at the outset
• Refinance later once cashflow confidence improves
• Focus more heavily on operational predictability
• Extend holding periods where exits are not feasible

UK portfolios are slightly outperforming global peers, and more businesses are beating expectations than falling short. IRRs remain strong, with over half of UK firms reporting returns above 20%.

This reinforces the central message of the report: hands-on execution and value creation beat passive exposure.

The 2026 report emphasises that returns now come less from market momentum and more from what firms can deliver during ownership. Firms are relying more on clearer KPIs, stronger reporting and deeper operational support. Holding periods are lengthening, with continuation vehicles now a common tool for high-quality assets.

Technology is the standout favourite for UK - Technology (69%) is now the leading UK investment sector, followed by financial services, healthcare, energy and life sciences. Specialist knowledge increasingly separates winners from the rest.

Deep sector expertise is now central to winning deals, raising capital and creating value.

While 31% rely mainly on domestic growth, most firms report contributions from both domestic and international markets. The most common UK investor destinations include The US & Canada and some key European countries like Germany, France, Ireland

Cross-border strategies also come with increased complexity: geopolitics, tariffs and regulatory considerations now require greater diligence and planning.