What has beaten out private equity in UK takeovers this year?

Private equity companies haven’t been as prolific or successful with UK takeovers this year as their reputation implies. It’s easy to suggest they are behind most bids, yet data tells a different story.

There were more trade buyers than private equity bidders on UK-listed takeovers in the first half of 2025, according to analysis by AJ Bell. Furthermore, five of the six abandoned bids so far in 2025 involved private equity companies.

The rise of trade buyers

Trade buyers will take a long-term view of a company’s potential worth and they are often happy to pay a fair price. In contrast, private equity tends to have a shorter timespan and they want to be able to flip an acquisition within three to five years at a profit. Those different time horizons can have a big impact on how much each party is prepared to pay in a takeover.

On that basis, one might expect private equity to be stingier with bids. What’s interesting is how the average premium for both trade and private equity deals so far this year is exactly the same at 34%. However, each bid needs to be viewed on a standalone basis as valuations range from company to company.

Potential reasons why private equity hasn’t been as prolific with deals

Private equity industry is awash with cash, known in the trade as ‘dry powder’, so access to funds is not a problem. The lower level of activity among UK stocks might be explained by three other reasons.

First, uncertainty around trade tariffs has led to many companies pausing investment until they get a clearer picture of the future. The same might apply to private equity – if they are going to spend big bucks, they will want confidence in the geography, industry and corporate profit potential. That information won’t be forthcoming until the Trump administration has completed negotiations with foreign trade partners.

Second, private equity risk appetite seems to have dwindled in recent years. They increasingly want companies that make good money today, not jam tomorrow. Naturally, these types of businesses might not be trading on cheap enough valuations to attract a bid.

Private equity firms pay closer attention to potential returns on investment and they won’t do deals unless the maths stack up. In contrast, a trade buyer might be prepared to acquire something that offers greater long-term strategic benefits rather than near-term financial gains. For example, this might be opening a door to a new geography or removing a major competitor from the market.

Third, private equity firms often look for missing pieces in the puzzle. They seek acquisitions that can slot into a portfolio of similarly minded businesses, potentially combining a few of them to create a bigger scale entity that is more attractive to be sold on. The UK stock market might not have what they’re currently looking for.

Takeover activity in H1 2025

Nearly 50 UK-listed companies were subject to bid interest in the first six months of the year. Many of these situations have resulted in a firm offer and several have been subject to a bidding war. For example, private equity group Advent looked to have sealed the deal to buy industrials group Spectris with a £3.7 billion bid for in June. It’s just been trumped by KKR which has offered £4.1 billion.

Twenty-one companies on the UK stock market received bids from trade buyers in the first six months of 2025. We define ‘trade’ as being an operating company in the same space or an adjacent industry.

Targets included Deliveroo which received a £2.7 billion bid from rival food delivery group DoorDash; and mining group Adriatic Metals which received a £927 million bid from Dundee Precious Metals.

Investment trusts were busy buyers

There were seven bids by investment trusts seeking to buy rivals to gain scale and size. This trend has been in motion for several years thanks to a large number of sub-£200 million trusts realising they need to merge or give up.

The trend was exacerbated in early 2025 after a high-profile activist investor campaign by Saba. Sleepy boards have woken up and have realised they can’t let their investment trust limp along, so we’ve seen big strategic changes including several running a beauty parade for a new manager or effectively inviting other trusts to make an offer to gobble them up.

Other takeover activity

A handful of investment firms outside of the private equity space made bids in the first half of the year. A few companies also put themselves up for sale and we’re now seeing bidders show their cards.

Irish hotels business Dalata put itself up for sale in March, effectively saying it didn’t suit being a listed company because it was much smaller than quoted peers, it was undervalued, and the shareholder base was concentrated, among other factors.

Fundamentally, Dalata is looking for a new owner with deep pockets that can fund its grand vision of significant growth. A consortium of Swedish hotels group Pandox and Norwegian real estate investor Eiendomsspar have since thrown their hat into the ring with a potential offer.

Source: AJ Bell, company announcements