INSIGHT: Back in Business – How Private Capital Can Rebuild Britain’s Growth Engine

The Leeds private equity and venture capital community is part of a sector that backs 2.5 million UK jobs, contributes £200 billion to the economy, and funds the businesses defining Britain’s future. But after a frenetic Covid boom, a brutal correction, and a recovery that shows no signs of abating, what is the honest state of the market — and what does it mean for investors, founders and business owners across the North?

More Than Money: Why Private Capital Matters

It is tempting to reduce private equity and venture capital to a caricature — sharp deals, quick returns, financial engineering. The reality, particularly in the UK mid-market and early-stage ecosystem, is far more sophisticated, real, and indeed more human. Behind every deal is a founder who built something special from nothing, a management team betting their careers on a plan, and an investor willing to back both with serious money.

According to industry body UK Private Capital, PE and VC investors now support over 2.5 million UK jobs across more than 13,000 businesses and contribute nearly £200 billion — 7% of GDP — to the economy annually.

For the North of England, this is not a distant London story. The North West was the second most active UK region for PE deals in 2025, and Yorkshire and the Humber saw deal volumes increase despite the difficult market. Leeds, Manchester and Sheffield are building something genuinely impressive — private capital has a Northern heartbeat!

Leeds Private Equity: Boom, Bust and an Unfinished Recovery

Pre-Covid, the UK PE market ran at a steady 1,200–1,400 deals per year. Then came 2021: ultra-low rates, pent-up capital and surging confidence created the most feverish deal market in living memory. Racey EBITDA multiples of 13–14 times became almost routine — prices that only worked if interest rates stayed near zero forever. Many assumed they would.

But of course, they didn’t. Russia’s invasion of Ukraine, a sharp inflation shock, and the mini-Budget of September 2022 — all ended the party abruptly. Mid-market deal volumes in H1 2023 were more than 50% below the 2021 peak. More of a collapse than a dip…

Recovery has been real but uneven. Deal volumes edged up 4.4% in 2024, then fell 10% again in 2025 — despite PE funds sitting on a record £190 billion of undeployed capital. The most telling number is exits: just 254 PE-backed businesses sold in 2025, the lowest since the pandemic. You cannot raise a new fund until you return money from the old one and the log-jam has some way to go before it’s cleared.

And the Venture Capital story mirrors Private Equity. Total UK VC investment levels hit £29 billion in 2022 — three times the pre-Covid baseline. The correction was brutal: deal volumes fell more than 40% by H1 2023. Since then, encouraging signs have emerged — seed investment surged 80% in 2024, UK deeptech attracted more investment than any other European country, and VC backed businesses now support c378,000 jobs, up 20% in two years. But despite real signs of recovery, deal volumes in 2025 remain down 14% year-on-year.

2026: Genuine Momentum, Genuine Risks

However, looking ahead there is real cause for optimism and I’m certain the Private Capital industry will play a key role in our economic recovery. £190 billion of dry powder needs a home, debt markets are improving, and 90% of PE respondents in a Deloitte survey expect to increase deal activity this year. Early deal pipeline signals from advisers on the ground are encouraging. Sectors such as AI, deeptech, healthcare and defence technology are in hyperscale territory and are therefore drawing serious VC attention.

But the risks are real. Ongoing conflicts in the Middle East and Ukraine, trade tariff uncertainty, and a valuation gap all have the potential to knock confidence quickly. Many business owners who considered selling in 2024 or 2025 chose to wait, however, the market rarely comes to those who sit on their hands indefinitely – eventually there is no good time to sell, deals will happen, businesses will grow and value created.

Thinking About Selling? Preparation Beats Timing

Business Asset Disposal Relief (CGT) rises again to 18% from April 2026 (it was 10% before the current government) — arguably another negative consideration for business owners considering a sale. But the more important message is this: preparation consistently beats timing. The business owners who achieve the best outcomes almost always started preparing two to three years before they wanted to sell. That means clean financials, a management team investors can back beyond the founder, and a growth story that faces forward, not backwards. Start now. Speak to the right advisors. Believe me, your future self will thank you for it!

The Defining Variable: People

A recent study on business exits in 2024 found that 71% of all value created came from actual revenue growth strategies — not financial engineering, not buying cheap and selling high, but building businesses that genuinely got bigger and indeed better. The era of loading a business with debt and waiting for rates to do the rest is over. Growth creates value, but growth is created and executed by people.

I’m proud to say the North boasts deep pools of senior talent — executives who have run businesses through full PE growth-to-exit cycles and know exactly what investor-backed value creation looks like in practice. Augmenting existing management teams with superstars and filling the gaps with the very best people to maximise value and address succession is one of the most valuable things business owners can do.

So, seize the opportunities while you can – bravery favours the fortune makers!