An assessment of the market through the Private Equity lens

Insights from Jon Duffy, Investment Director at Endless

No two years ever seem to be the same in the Private Equity dealmaking market. For many years now, we and the wider corporate dealmaking community have had to contend with and respond to what feels like an ever-increasing number of ‘shocks’, caused by economic and political uncertainty.

Despite this, the growth of the UK Private Equity industry has continued. UK Private Capital (formerly BVCA) report that PE and VC investors now back businesses that make an annual economic contribution of nearly £200bn across the UK and support 2.5 million jobs.

To remain successful in this ever-changing deal environment, Private Equity firms are having to adapt and evolve quickly. We have seen deals taking longer to complete as buyers exercise caution and undertake more due diligence, aiming to bring additional comfort to Investment Committees in the face of a more uncertain market.

The fundamentals for a strong Private Equity market remain - UK-based private capital funds had £190bn of capital yet to invest at the end of 2024 (per UK Private Capital), representing a huge opportunity for the sector to continue to deliver on its investment potential.

Following a period of relative economic stability, confidence around planning appears to be improving. Conversations with advisors suggest that this has led to an improved deal pipeline in the early months of 2026 and this, together with the Private Equity 'dry powder' is leading to a general sense of optimism that private equity investment levels will increase in 2026.

New deal activity: Sectors and Situations.

The ever-changing macroeconomic environment has contributed to a number of interesting sector and situational themes in the dealmaking environment in recent times.

In terms of active sectors, we have seen an increased number of opportunities across the Industrials, Engineering, Construction and Defence spaces, with activity driven by both geopolitical trends and shifting trade policies.

Rumoured Capital Gains Tax changes towards the end of 2024, meant that a lot of dealmaking activity during that time was driven by owner-managed or family-owned businesses who were exploring opportunities to realise value before potential increases in tax rates. Following the changes confirmed by the October 24 budget, we witnessed less activity in this area last year.

Through 2025, a key theme we saw was increased activity around carve-outs and non-core disposals, as larger corporates and PLCs sharpen their strategic focus or looked to access liquidity through corporate divestitures.

In our experience, larger corporate sellers often prioritise acquirers who can demonstrate speed and deliverability, sometimes driven by the need to meet public reporting deadlines and minimise the risk of drawn-out sales processes and failed transactions. They also look to potential acquirers who can demonstrate a track-record and understanding of the complexities involved with a carve-out transaction.

The ability to undertake financial and commercial diligence in house, for example and also not having to rely on third party funding on completion, can remove significant time from an acquisition process. This is one area where Endless can excel, often making investments in a matter of weeks.

In 2025, we completed four deals, all of which were carve-out transactions. We acquired Veloris, a leading specialist supplier of batteries and energy storage solutions, GEO a manufacturer of specialty chemicals and Waddington Europe, a sustainable packaging specialist, all from US parent companies and also acquired the hire division from UK listed parent HSS Hire Group.

Challenging exit environment but strong appetite remains from trade buyers

There has been a lot of commentary in recent months on ‘bloated’ Private Equity portfolios and investors holding assets for longer periods. This has been partly attributed to a subdued dealmaking environment and a number of failed/stalled processes, with fewer secondary transactions.

Investors who (in hindsight) overpaid for businesses, are also having to wait longer to prove performance. However, given the typical 10-year fund cycle, it will be interesting to see how this dynamic plays out in the coming years as investors will have to balance a demand for funds to be returned to LPs with a potential inability to recoup initial outlay and therefore having to crystallise losses.

At Endless we certainly feel like we have bucked the trend in this area. We had a very successful year of realisations of portfolio assets during 2025, working with a number of local advisors to deliver 10+ exits. A key theme here was overseas and particularly US trade buyers, who continue to see UK assets as providing better value than pursuing M&A targets in their home country.

Trade buyers can take a longer-term view on any given sector or industry than their Private Equity counter-parts and can often become more active when a Private Equity investor is cautious, given reduced competition on deals and the ability to move at their own pace.

In recent times the Endless funds have successfully exited Karnova to OSI Group, Greenray to Flowserve Corporation and Sewtec to Automated Industrial Robotics (all US based buyers) and also Findel to Manutan (France) and Edbro to Orsan Automotive (Turkey). We also delivered successful exits to UK trade buyers in 2025, with KTC sold to Whitworths and Realise sold to AQA.

Evolution of Deal Origination

In the increasingly competitive private equity deal environment, the way in which deals are sourced has continued to evolve.

Whilst maintaining advisor relationships is still crucial, relying solely on the traditional methods of periodically ‘wining and dining’ key contacts will no longer give you an edge in a competitive deal market.

Private Equity firms are putting more importance on relationship building with potential targets well in advance of any potential future transaction.

Dedicated origination functions have now become more common. Origination is time-consuming and resource intensive and not an activity that an Investment team member can do effectively when allocating half a day a week to this, especially when also transacting deals and managing an existing portfolio of investments.

Alongside dedicated origination functions, we are also seeing a proliferation of AI driven sourcing technology, including improvements in CRM systems and company databases.

One industry peer I spoke to recently told me that not only were they investing in building their own AI-based origination tech internally, but they were also experimenting with AI role-play tools and AI-generated podcasts to give them an edge in successfully winning a deal.

In summary, I believe there are plenty of reasons to be optimistic for those Private Equity investors who are able to continue to evolve and adapt to the ever-changing dealmaking environment.

Our Perspective

Growth and Private Equity go hand in hand. It is such an important relationship for us and our relationship with Endless goes back almost 20 years. We estimate that 25–30% of board appointments in Yorkshire and the East Midlands are made in PE backed companies, so staying close to the sponsor community is not optional, it is essential.

What feels different in this cycle is not the importance of PE, but the expectations placed on leadership. Capital is available and sentiment is cautiously improving, but investors are more selective and value creation is being driven operationally rather than financially. Sponsors are holding assets for longer, using buy and build strategies, and focusing on margin, cash and technology enabled growth.

That is changing the profile of the boards we are asked to build. The demand is not simply for proven operators, but for leaders who can deliver pace, data literacy and cultural alignment through periods of transformation. Chairs and NEDs are being appointed earlier in the investment cycle and are expected to be active partners in strategy, not just governance.

For regional businesses this presents a real opportunity. Private equity continues to be one of the most significant sources of growth capital in the North and Midlands, and it is driving the professionalisation of boards and leadership teams at scale. The firms that engage early, build the right leadership capability and understand how to work with sponsors will be the ones that create the most value.

For us, that means our role is not simply to fill positions, but to help shape boards that can thrive in a sponsor-backed environment. The closer we stay to the PE community, the better we can support both investors and management teams to deliver sustainable growth.