Yorkshire private equity activity cools amid tough trading conditions

In terms of the proportion of deals completed in the region, Yorkshire accounted for 8.9 per cent of all deals taking place in the first half of 2023, a slight increase from 8.6 per cent in the first half of 2022.

The picture also remained largely unchanged elsewhere in the country, with almost half of all mid-market deals (47.4 per cent) completed in the London region.

Giles Taylor, head of corporate finance at KPMG in Yorkshire, said: “During the first half of this year, the momentum of mid-market private equity deals in the Yorkshire region slowed down, mirroring the national trend.

"The combined effects of increasing inflation, rising interest rates, and geopolitical uncertainty have knocked investor confidence and consequently affected the volume of deals.

“Despite a decline in transaction volumes, companies in Yorkshire have demonstrated resilience this year. In the face of these challenges, the region's dealmaking sector has successfully preserved its overall market presence.

“Notably, there has been an uptick in the value of transactions accomplished within the mid-market segment. This increase is likely attributed to broader market dynamics, where larger transactions have shifted into the mid-market category.”

On a national level, the report revealed that 327 deals worth £32 billion were completed in the first half of 2023, a reduction in volume of 12 per cent when compared with the same period in 2022.

For the overall private equity market, however, 689 deals worth £70 billion were completed in the first half of the year, compared to 909 deals completed in the first half of 2022.

A recent study from KPMG and the University of Nottingham also identified a third of local areas in Yorkshire as Business Creation areas. These are places expected to experience a high rate of new business and investment growth.

The study identified Bradford, Doncaster, Hambleton, Kingston upon Hull, North East Lincolnshire, Selby and Wakefield as areas with the highest start-up rates, combined with high expectations on investment growth.

Barnsley, Calderdale, East Riding of Yorkshire, Kirklees, North Lincolnshire and Rotherham were also named as areas with high expectations of growth in business investment, as well has having firms which are facilitating flexible working with new digital infrastructure.

Harrogate, Richmondshire, Ryedale and Scarborough were identified as areas with high household credit scores and a consumer and leisure-focused economy.