Houlihan Lokey says investors favor top-tier assets in UK, European leisure market
HLI•Investors in the UK and European leisure market are favoring strong brands and scalable businesses, while weaker assets struggle to attract buyers. Houlihan Lokey expects labor costs, taxes and other macroeconomic pressures to squeeze profits for six to 12 months.
1. Selective investment
Investment in the UK and European leisure market remains highly selective, with strong brands commanding attractive valuations and weaker assets struggling to attract buyers. Private equity is leading dealmaking, while major UK strategic buyers are focusing on existing operations; funds favor scalable businesses with exposure across multiple geographies.
2. Areas of interest
Quick-service restaurants, fast-casual dining and franchise models are attracting investor interest, and Europe offers expansion opportunities in a less penetrated market. Forced sales of high-quality freehold pubs may offer opportunities for well-capitalized buyers.
3. Costs and demand
Macroeconomic pressures are expected to persist for six to 12 months, with labor costs and taxes squeezing profits despite resilient demand.
