Alantra’s Charles Lanceley: Private equity poised for a comeback in the UK&I

In a year marked by tepid deal activity, Charles Lanceley, Alantra Managing Director specialising in the VMS, food, and beverage sectors, anticipates a resurgence in private equity deals in 2025. 

This excerpt from our 2025 UK&I M&A Outlook Report, which features insights from 8 top UK&I dealmakers, explores his perspective on how investors are navigating geopolitical uncertainties and adapting to evolving market conditions. Charles discusses the anticipated shift in deal structures, the impact of trade consolidation in specific sectors, and the importance of proactive vendor due diligence in today's market.

Evolving deal structures and the rise of protective measures

Charles anticipates a resurgence in private equity deal activity in 2025, as investors adapt to geopolitical uncertainties and consumer sentiment improves.

With investors now accustomed to a stormy geopolitical landscape, private equity is expected to drive a resurgence in deal activity in 2025, with trade deals forecast to lag transactions involving sponsors.

Against a tepid year for deals, Alantra Managing Director, Charles Lanceley, who specialises in the VMS, food, and beverage sectors, says the market has become accustomed to broader macro themes such as commodity price volatility and Middle Eastern tensions.

“They are not unknowns anymore,” he says. Consumers’ propensity to spend is one factor that may determine how deals play out. “Consumer sentiment is improving. Lower mortgage rates will support a more positive outlook and spending. This should reduce the risks around areas where consumer spend is perceived to be discretionary, and financial sponsors may be more willing to allocate funds to these sectors.”

Charles expects more private equity deals with lower debt-to-equity ratios. “Leveraged buyouts in the UK and being done at three times EBITDA. Go back ten years the multiple was over six for big deals,” he says. He expects private equity to take more creative positions in deals, often with protective structures in place. “Preferred returns have been a good tool for private equity to protect against downside. 

They may take a 20% stake in a business and negotiate a preferred position in the capital structure. The value of the business would have to deteriorate significantly before the 20% stake was at risk. I think we’ll see structures with protection become more common.” Charles says the big trade players in food and beverage, who have historically had good balance sheets and been acquisitive, have reset their strategies and identified targets post COVID. But they are not yet ready to act. “I think trade activity will remain where it is next year, with the exception of a few sub sectors.”

This includes assets in consumer health care and vitamins, minerals and supplements, which have been undergoing a period of consolidation that may continue into 2025. “Businesses like Karo Healthcare, Vision HealthCare and WindStar Medical have been doing deals across Europe. It’s the same in the contract development and manufacturing sector, where trade consolidators with private money behind them are driving 90% of European deal activity. Standalone private equity firms would like to get a look in, but it’s difficult because they don’t have synergies and they’re not going to be able to pay as much as the consolidators,” he says.

Charles says vendor due diligence is now happening earlier in the average deal timeline to ensure the businesses are properly prepped before going to market. “You need to have two things to do this. You need a deal value big enough to warrant that investment in time and money upfront. And you’ve got to have enough confidence you’re going to get a deal done. If you lack those two things, you’re unlikely to want to spend a whole lot of money doing diligence upfront.”

He says vendor finance is an option to get some transactions over the line. “More flexibility is coming back into the market in terms of debt financing structures including mezzanine and unit tranche options, as well as vendor loan notes. With equity deals, there are many different structures.”

His advice to other deal makers is to remember there can be high pressure times, but it’s important to try and have fun along the way. “Try and maintain a positive outlook, even during the inevitable periods of intense pressure. It’s essential for a long and fulfilling career in M&A.”

Looking ahead

Charles Lanceley's insights offer valuable perspectives on the M&A landscape in the UK&I. To gain a deeper understanding of the key trends and predictions shaping the market, we encourage you to download the full M&A Outlook report. This comprehensive report features in-depth analysis to equip you with the knowledge you need of the current deal environment in the United Kingdom and Ireland to be able to capitalise on emerging opportunities.