Total private equity deals in Wales and the South West rose in the first half of this year, according to KPMG UK’s private equity pulse.
The mid-year study into private equity deal activity found that interest in the region grew by 14% compared to H1 2025, with 72 deals completed.
Private equity exits in the region also increased marginally in H1 2026, with nine transactions completed compared with eight in H1 2025.
The findings come despite a backdrop of economic uncertainty, influenced by ongoing geopolitical developments and concerns surrounding the wider impact of AI across many sectors.
Bolt-ons remained the largest component of private equity activity across the South West and Wales, with 51 completed, making up 71% of all deals. Minority transactions were the second largest deal type with 10 (14%) deals, followed by traditional buyouts, including leveraged buyouts, of which there were six (8%).
Investment in the South West and Wales accounted for 8% of the total new PE backing in the UK. Deal activity by volume increased across four other UK regions in the first half of 2026 – the South East, North West, Yorkshire and the North East – compared with the first half of 2025.
John Levis, Head of Corporate Finance across the South West & Wales at KPMG UK, said:
“The growth we’ve seen in deal volumes across the South West and Wales is encouraging, particularly when you set it against the national picture. What’s driving that resilience is the quality of businesses investors are finding across the region, in sectors like aerospace, advanced manufacturing, life sciences and food & drink.
“The policy environment – with a focus on devolution, combined with the Defence Investment Plan – has given investors more confidence to move on opportunities with strong fundamentals.
“The bolt-on space has been particularly resilient because there are well-run businesses looking to scale through acquisition. Once clarity comes around AI and the geopolitical picture settles, I think we’ll see that confidence translate into momentum across other deal types through the second half of the year.”
Despite a reasonably strong start to the year, UK-wide private equity deal activity slowed in the first half of 2026.
The firm’s most recent M&A study revealed that deal volumes fell 3.4% year on year, with a total of 888 deals closed throughout the first half of 2026, compared to 919 over the same period in 2025. The second quarter witnessed a sharper decline compared to Q1 as the conflict in Iran and concerns around the wider impact of AI put the brakes on activity across all private equity. Most deals took place in Q1 with 455 deals, while Q2 saw a 10% decrease year on year.
Sector performance was mixed, with Healthcare the only sector to see an increase in volumes, rising 9.3% albeit from a low base. While Business Services and Technology, Media and Telecoms (TMT) accounted for 64% of all deals over the period, both saw falls of 5.9% and 3.7% respectively, with Consumer Goods and Retail experiencing the steepest decline at 17.2%.
Alex Hartley, Head of Corporate Finance at KPMG UK, said:
“While uncertainty caused by the conflict in Iran led many private equity houses to re-assess or delay deals, the defining feature of the market this year has been concern over AI’s impact on certain sectors. As dealmakers gain confidence around this and potential impacts on valuations, overall volumes should lift as the year progresses. But we will also see investors looking for assets that are less exposed to AI, with greater focus on blue collar services and industrials that offer secure, recurring revenues.
“However, potential tax changes under new leadership in Government could dominate the market later this year, particularly if investors anticipate changes to capital gains tax. Any speculation could trigger a flurry of activity, as we saw at the end of 2024.”
