Grant Thornton’s Private Equity Mid-Year Review 2025 paints a clear picture: uncertainty is slowing private equity dealmaking. After a brief rebound in late 2024, optimism faded fast as US tariffs, geopolitical risks, and investor caution created a market defined by hesitation rather than momentum.
The report highlights what many SMEs already feel, deals are slower, valuations are softer, and fundraising is harder. For business owners, that means waiting months (or even years) for private equity capital that may never materialise.
At Finspire Finance, we think this moment calls for a different mindset. With interest rates finally trending down and lenders competing for quality borrowers, flexible funding may now be the smarter, faster, and more strategic option than equity investment.
Private Equity in 2025: All Caution, No Conviction
According to Grant Thornton, H1 2025 saw deal activity stall after an inflated Q4 2024. What was meant to be a rebound turned into a pause.
Deal volumes: down as much as 10% since the start of the year.
Exit activity: down 25% year-on-year.
Holding periods: rising sharply as firms delay sales and cling to assets.
Dry powder: at record levels, but still undeployed.
This slowdown isn’t due to lack of capital. It’s a confidence issue. With $1.2 trillion in uninvested funds globally (Bain & Co.), many private equity firms are effectively waiting out the volatility.
For UK SMEs, that means one thing: private equity is moving too slowly to be useful for growth right now.
The Hidden Cost of Waiting for Private Equity
Private equity may seem like the dream: expertise, networks, and capital. But timing is everything. In 2025, the timing is off.
Here’s why:
Valuation compression means you’ll likely give up more equity for less capital.
Decision-making inertia across funds makes deal timelines painfully long.
Exit uncertainty means PE-backed companies could be stuck in limbo for years.
The single biggest barrier to deal execution is decision-making inertia.
In this kind of market, a great business could lose 12–18 months just waiting for a deal to clear. That’s a huge opportunity cost, and it’s why many forward-looking SMEs are turning to structured debt and revolving facilities instead.
Funding: The Fast Track to Growth
While private equity retreats, lenders are opening up.
Interest rates have been progressively falling over the last couple years (from 5.25% to 4%), and competition in the SME lending space has never been stronger.
Alternative funding offers businesses three key advantages right now:
Speed: Approval and drawdown in days, not quarters.
Control: You keep your equity, and your decision-making power.
Flexibility: Revolving, revenue-based, or tax-linked funding adapts to your cashflow.
Where PE is about ownership, funding is about empowerment, giving your business the agility to act while others wait.
The Sectors Still Thriving, and How SMEs Can Tap In
Grant Thornton identifies several resilient sectors driving mid-market activity:
Infrastructure & energy
AI and digital transformation
Professional services
Data centres
Health and wellness consumer markets
Finspire’s insight: these same sectors are where fast capital access is most valuable. When opportunities appear (whether a new contract, equipment need, or acquisition) businesses that can draw on working capital instantly will outperform those waiting on investor approvals.
That’s why we’re seeing growth in:
Revolving credit facilities for high-margin growth companies
Revenue-based finance (RBF) for SaaS and recurring-income models
Tax funding to free up capital for expansion
Invoice finance to unlock cash from slow-paying clients
These products mirror the flexibility of equity funding, but without dilution or delay.
Why Borrowing Now Could Beat Selling Later
Here’s the real strategic advantage of funding over equity in 2025: timing.
Grant Thornton’s outlook suggests stability may not return until early 2026. That gives SMEs roughly a 6–12 month window to grow now and raise later.
If you use agile funding to expand revenues and EBITDA during this period, you’ll hit the next PE cycle stronger, commanding better valuations and more favourable terms.
Opportunity in Uncertainty
Grant Thornton’s review shows a market clouded by hesitation, but also one full of potential. While private equity sits on the sidelines, entrepreneurial lenders and SMEs are moving fast.
This is the moment for founders to stay liquid, stay independent, and stay ready.
Funding doesn’t replace private equity, it gives you the leverage to meet it on your own terms when the time is right.
