The evolution of investment: UK private equity report 2026

The UK private equity market is adapting to tougher conditions. Findings from over 100 UK respondents show confidence in portfolio growth, but a clear shift towards value creation, sector focus and long-term thinking.

800

private equity professionals

7

regions

100+

UK respondents

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Across the report, a single narrative emerges: Discipline. Focus. Execution. The UK PE environment has shifted materially since the pre-pandemic era.

Higher costs, tighter financing and selective markets are pushing UK private equity back to fundamentals with operational depth and technology shaping future performance.

The UK private equity market is adapting to tougher conditions. Findings from over 100 UK respondents show confidence in portfolio growth, but a clear shift towards value creation, sector focus and long-term strategies.

UK private equity is becoming:

More selective in deal sourcing
More hands-on in value creation
More operational in approach
More technologically enabled

UK market outlook

69UK investors target technology - the UK’s #1 sector
59cite market/geopolitical external trends as the top drag on performance
43of Majority Active funds achieve 20–30% IRR. Majority Active funds deliver stronger returns than passive approaches.

This is not a return to 2019. It is a more thoughtful market, driven by fundamentals, where operational sophistication, strategic clarity and distinctive sector expertise are differentiating factors in success.

Key insights from the UK market

“We’re getting back to the basics of what private equity is all about: rolling up our sleeves, working with management teams, and really building something special from the inside out. It's a slower, more deliberate process, but when you see the progress a company makes, it's incredibly rewarding.”

Director

UK asset management firm

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Report highlights

What the data tells us

Financing issues affect most firms’ strategies - 59% for build-up and 51% for exits.
Majority Active funds clearly outperform - 43% hit 20–30% IRR vs 35% for others.
Geopolitical uncertainty and tariffs are leading challenges - 57% and 44%.
Tech is the top UK sector (69%) and 83% of funds invest in the UK, but a broad range of other markets is also targeted.

How the UK compares globally

Financing issues impact UK firms more strongly than the global average.
UK investors show slightly stronger portfolio performance than global peers at 3 years and exit.
UK IRRs skew higher, with more funds reporting returns above 20%.
The UK is more tech focused than global respondents (69% UK vs 58% global).
UK investors lean more heavily into active ownership compared to the global split.

Key insights from the UK market

Technology, especially AI, is transforming both GPs and portfolio companies

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

A tougher market that demands agility and discipline

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 issues reshape buy and build and exit strategies

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

Performance is resilient with the UK slightly ahead of global peers

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.

Value creation is increasingly defined by operational depth

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.

Sector focus is now a decisive differentiator

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.

International growth remains a key lever

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.