Midlands
The Midlands has a rich heritage in manufacturing and engineering, but is evolving from a hub for industrials into a home for specialist services companies.
Business and professional services now account for 17 of the 40 qualifying companies in the region, nearly half of the total, and far outnumber manufacturing, which represents just six firms. This marks a significant shift from our Private Equity Value Report 2024, when 12 manufacturing businesses featured in the ranking.
But while the region’s sector mix may have shifted, what hasn’t changed is its track record as a place where resilient businesses create value through operational delivery.
The Midlands delivers average Ebitda growth of around 62% across ranked companies and generates more than £3.6bn in combined revenue, underscoring that sectoral shifts reflect changes in where value is being created, rather than whether it exists.
Indeed, NorthEdge partner Andrew Skinner says that while the Midlands’ “industrial heartland” is still strong, it also provides opportunities in technology, healthcare and business services.
“Tech and healthcare are quite broad sectors but they’re really interesting because there are a number of high-quality academic institutions across the Midlands which feed early=stage businesses,” Skinner says.
“The core for us in all of this is that you get some fantastic entrepreneurs that want to solve problems, whether it’s Birmingham, where the ecosystem is about supporting early-stage businesses coming out of the university system; or the tech and healthcare community in Nottingham, which fuels a lot of ingenuity at early stages.”
For David Bains, LDC partner and head of East Midlands and East of England, says that last year about 40% of the firm’s deal flow in the East Midlands was in business services.
The growth of the services sectors across the region, however, isn’t disconnected from its core industrial base. The lines between services, manufacturing and engineering are blurring.
“Now you get lots of businesses that used to just manufacture but are now going up the value chain to provide services as businesses need to repair, maintain, inspect, and test the various products and equipment they’ve got,” Bains says.
This breakdown of traditional, rigid sector siloes is reshaping the region’s value creation model.
Rather than relying primarily on production scale, growth is increasingly driven by business models built around recurring revenues, long-term contracts and operational expertise as well as acquisitions.
Another defining feature of the Midlands economy is its strength in what investors often describe as essential or enabling technology. The region excels at developing software and systems that underpin traditional industries. Businesses in energy services, marketing infrastructure and operational software illustrate how technology is enabling efficiency and compliance.
Infrastructure services are a particularly strong theme, with technology businesses supporting sectors such as water, energy, fire safety and data centres attracting sustained investor interest.
These markets require ongoing investment and technical capability, making them well-suited to private equity’s operational approach.
One example is NorthEdge’s investment in energy services platform Correla. Originally carved out from a not-for-profit owner, the business provides infrastructure and data services to energy networks, illustrating how industrial sectors are increasingly dependent on technology-enabled support providers rather than standalone manufacturers.
Similarly, marketing technology specialist Inspired Thinking Group shows how the Midlands is producing scalable, technology service businesses rooted in operational capability rather than disruptive innovation.
Tech and healthcare are quite broad sectors but they’re really interesting because there are a number of high quality academic institutions across the Midlands which feed early-stage businesses
This emphasis on execution is also evident in how investors approach value creation. The Midlands is heavily dominated by majority buyouts, which account for nearly nine in ten qualifying deals, reflecting a hands-on investment style focused on operational transformation rather than financial engineering.
“What are the three or four things that the business needs to do exceptionally well to make the next phase of its development a success?” Skinner says. “For us, that all becomes about discipline around those three or four areas and relentless execution of them.”
Buy-and-build consolidation and professionalisation are key strategies that sponsors active in the Midlands deploy to effect business transformation.
Bains says that buy-and-build is now embedded earlier in the investment lifecycle than in the past.
“Private equity is increasingly using buy-and-build as a value creation methodology with 50% of LDC’s East Midlands portfolio completing an acquisition as part of their journey with LDC,” he explains, also noting that firms begin mapping acquisition opportunities before completing a deal.
AI, meanwhile, is playing a key role in improving efficiency and enabling more data-driven decision-making across portfolio companies.
Geographically, Birmingham remains the region’s primary hub, hosting the largest concentration of high-growth companies, but strength is widely distributed across clusters in Nottingham, Leicester and Solihull.
This distribution reflects the Midlands’ long-standing advantages: deep industrial supply chains, strong management talent and a pragmatic entrepreneurial culture.
Despite the rise of services, manufacturing itself has not disappeared from the Midlands story. Instead, it has become more selective and specialised.
The fastest-growing Midlands company in this year’s research, Sterling Thermal Technology, exemplifies how niche engineering businesses can still generate exceptional value. Specialising in advanced thermal processing systems for aerospace and industrial applications, the company has achieved Ebitda growth of more than 400%, highlighting the continued strength of high-precision manufacturing in the region.
Businesses like Sterling Thermal Technology typically operate in defensible segments requiring specialist expertise and often combine engineering capability with ongoing service contracts, reinforcing the broader shift toward hybrid business models.
In the end, whatever sectors private equity investors are looking at, management team quality remains the ultimate predictor of investment success. Both Bains and Skinner emphasise that people remain the starting point for investment decisions. Decades of industrial and commercial experience have been built up in the region.
Bains says his team spends much of its time meeting entrepreneurs across the region to identify leaders with the right ambition and mindset.
“We focus very much on management teams, we’re trying to find management teams that are ambitious, passionate and backable,” he says.
Skinner adds: “The team are the first area that we look to form a view around,” he explains, adding that private equity’s role is often to strengthen leadership benches and help management scale more quickly.
The Midlands may be best known for its industrial heritage, strong universities and innovation track record, but it is the quality and experience of the region’s executive talent that is one of the biggest attractions for private equity investors.
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