As we step into 2025, the UK private equity (PE) industry finds itself at a pivotal juncture, facing significant challenges despite positive sentiments from around the industry.

Whilst comparatively a slow year, PE deal activity made a comeback in 2024, up 12% year-over-year. PE exit activity also picked up in 2024, up 24% year-over-year. Quarterly data shows a ‘V’ shape recovery in exit volumes. Despite subdued valuations, investors are prioritising liquidity for LPs, bringing a backlog of delayed exits to the market.

Despite broader challenges in the job market, we expect the private equity and asset management sectors to see a rise in recruitment activities.

Challenges to navigate:

• Economic pressures: Persistent inflation and interest rate fluctuations continues to increase the cost of capital and complicate deal structuring.
• Intensifying competition: The market for finance talent remains highly competitive. Private equity firms are competing not only with each other but also with investment banks, consulting firms, and tech companies for top-tier finance talent. We have also seen salaries from those leaving the big-4 rising last year, pushing staffing costs up for many firms.
• Evolving skill requirements: We have seen the focus shift from traditional accounting to value creation - therefore finance professionals will need to demonstrate a broader skill set. This can include financial modelling, proficiency on systems, and business partnering skillsets.
• Hybrid work models: Flexible working arrangements remain the norm across the wider job market, although we saw most of the PE sector move to 4 or 5 days back in the office in 2024. Finance professionals value the ability to balance careers with personal priorities, and the firms that offer hybrid work models will have a competitive edge in the job market.

Opportunities in the UK market:

• Mid-market strength: The mid-market segment, traditionally a stronghold for UK PE, remains robust. Despite economic uncertainties, these companies are often agile and innovative, making them attractive targets for buy-and-build strategies.
• Tech investment: The UK’s thriving tech ecosystem continues to attract significant PE interest, with sectors like artificial intelligence, fintech, and healthtech leading the charge. These areas are expected to drive value creation and offer lucrative exit opportunities.
• Green investment: Environmental, social, and governance (ESG) considerations are no longer optional. Investors are increasingly prioritising sustainable and impact-driven investments, incentivised by changing government priorities and consumer behaviour.

Improving hiring market

Overall, conversations with CFOs across the market are positive with firms more willing to deploy capital and take advantage of lower valuations. As a result, things are looking up in the hiring market with more newly created roles for existing industry finance experts and new entrants from advisory firms.

As we see the market for new talent improve and increased competition for top-tier candidates, we expect that firms will have to adjust the increasingly strict barriers to entry that we saw in 2024. This may mean firms are forced to hire on potential rather than existing skillset, offer better mentorship programmes and offer increased flexibility.

Get in touch

If you’re looking to hire finance talent with the private equity space, or are seeking a new career role, we’re here to help. Contact Seb Ellis in the first instance on sebellis@srmrecruitment.com or call +44 (0)7300 853160