UK Exit Recovery - a snapshot review

A private equity exit boom is filling headlines this summer. Look closer at who is actually buying, and it reads less like a market returning to health and more like one recycling itself.

Britain's private equity industry has had a busy few months. £20.9 billion changed hands across 131 exits in the first four months of 2026 alone, and the wider UK M&A market posted a 12% rise in deal value to £131 billion for the year to date. After three years of headlines about a stalled market, it would be easy to read this as the recovery everyone has been waiting for.

Look at who is actually buying, and the picture changes.

WHO'S ACTUALLY BUYING

Of those private equity exits, 62% were sponsor-to-sponsor sales, one private equity firm selling to another. Three years ago that figure was 39%. It is not that more assets are finding genuine new owners, be they trade buyers, family offices or the public markets. It is that the same pool of capital is passing the same assets between itself, and doing so from a longer starting point: average holding periods have stretched to 7.2 years, up from around five a decade ago.

That distinction matters more than it first appears. A sponsor-to-sponsor sale, a secondary buyout, typically clears at a discount to what a trade sale or listing would fetch. Pricing on unsold secondary positions is reportedly running at 60 to 70 pence in the pound of carrying value. When most of a ‘record’ exit year is really assets moving sideways rather than up and out, the headline figure says less about market health than about how much liquidity pressure funds are under to sell at all, whatever the price.

WHY THE FRONT DOORS ARE SHUT

The more conventional exit routes have narrowed sharply. Only two UK IPOs completed in the first quarter of 2026, against nine across the whole of the first half of 2025. For companies with meaningful scale, upward of £50 million in recurring revenue, the conversation now starts in New York rather than London almost by default; Flutter Entertainment's full delisting from the London Stock Exchange in June was the most visible recent reminder of that pull. Reforms to the UK listing regime have made the mechanics of floating easier, but they have not restored the institutional appetite that would make anyone actually want to.

Trade sales are little easier to complete. National Security and Investment Act reviews, mandatory across a wide range of sensitive sectors, can add twelve to thirty weeks to a deal timetable, enough on its own to put some overseas buyers off. And on price, sellers still anchored to 2021 to 2022 valuations are running into buyers pricing off 2025 to 2026 realities. Neither side blinks, so the deal simply does not happen. Official figures bear this out: the Office for National Statistics recorded 352 UK M&A transactions in the first quarter of 2026, down from 495 the quarter before, with inbound investment from overseas buyers falling most sharply of all.

A ‘record’ exit year built mostly on funds selling to each other is not a market clearing. It is a market recycling itself because the real exits are not there.

THE SAME PATTERN, ON THE OTHER SIDE OF THE TABLE

There is a familiar shape to this. A few weeks ago we wrote about how the venture funding rebound was concentrating around a small number of very large rounds rather than lifting the whole market. The exit market is now showing the mirror image. Overall UK M&A deal count fell 12% year on year to just under 3,000 transactions, yet total value rose 12%, because average deal size jumped 28% to £44 million. Fewer deals, done with more conviction, at higher average value. Capital, on both the way in and the way out, is concentrating around fewer, larger, more carefully chosen counterparties, leaving everyone else to compete harder for a shrinking share of attention.

WHAT IT MEANS FOR ANYONE PLANNING AN EXIT

None of this means good businesses cannot be sold or floated in 2026. It means the process of finding out who genuinely wants to buy, and at what price, has become far less forgiving of a broad, generic process. Waiting for an IPO window that may not reopen until 2027 or 2028, or running a wide auction in the hope a strategic buyer bites, is increasingly a bet against the prevailing structure of the market rather than a plan built on it.

The businesses and funds navigating this well are treating buyer and investor identification as a research exercise rather than a networking one: understanding precisely which acquirers, sponsors or continuation vehicles have both the mandate and the appetite for a specific asset, well before a process goes to market, rather than discovering the field is thin only after months of a stalled sale. New venues such as the Pisces platform, launched in May to allow regulated secondary trading in private companies without a full listing, are themselves a sign that the market recognises the old routes are no longer enough on their own.

The exit market is not closed. It is simply narrower, more selective and considerably less forgiving of guesswork than the headline figures suggest, which makes knowing exactly who is sitting on the other side of the table more valuable than it has been in years.