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📉 Why UK companies are 30% cheaper than American ones (US buyers have noticed)

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Idin Sabahipour
May 28, 2026

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US private equity firms have been buying up UK-listed companies. Just last week, US private equity firm Apollo made a £1.5 billion bid for UK engineering firm Bodycote.

The reason is simple – UK-listed companies trade at roughly a 30% lower valuation than their US equivalents, partly because global investors crowded into US tech and partly because UK pension funds pulled their money out of British shares.

Each “take-private” deal makes the London Stock Exchange a little smaller – and a little less attractive to the next company thinking about listing there.

EDITOR’S RAMBLE 🗣

It actually feels like summer here in London.

Me and my fiancée in Wales over the weekend for a wedding

It’s 31° today, which – in the UK – usually means things just. stop. working.

The trains are delayed, shops sell out of fans, and I struggle to focus (luckily, the LittleLaw office has good air conditioning).

But here’s something I learned. In Spain, there's actually a legal maximum working temperature: 27° for desk work, 25° if you're doing anything physical. If it goes above that, your employer has to do something about it.

And this week, government advisers have started pushing for something similar in the UK. They’ve warned that 40°C heatwaves could become normal by 2050, and that the country simply isn't built for it.

So, if you fancy a day off, send that article to your boss 👆️ (or try move to Spain by lunchtime).

📉 Why UK companies are 30% cheaper than American ones (US buyers have noticed)

What’s going on here?

Last week, Apollo, the US private equity firm, made a £1.5 billion bid for Bodycote, a London-listed company that heat-treats metal parts for industries like aerospace and cars.

Recently, it's become clear that this isn't a one-off. US private equity firms have been snapping up UK companies, both private and those listed on the London Stock Exchange. PE firms raise money from investors to buy companies, grow their value, and sell them on for profit.

🤔 What’s the London Stock Exchange?

When a company wants to grow, it often needs money to fund its goals. One way to raise it is to sell slices of ownership – called shares – to investors. Smaller companies usually sell shares privately to a handful of people they know, but the biggest companies can go a step further and sell shares to the general public.

To sell to the public, a company "lists" on a stock exchange – the marketplace where those shares are then bought and sold, with prices moving daily based on what buyers think the company's worth. It can also work the other way. If a buyer wants an entire company, it can offer to buy every share from public owners, take it private, and remove it from the exchange (called a "take-private").

The London Stock Exchange is one of the world's oldest and biggest – home to major British companies like Shell and Tesco.

Over the past year:

Why are UK companies a good deal?

UK-listed companies trade at valuations roughly 30% below their US equivalents. There are two main reasons.

  1. 🌍 Global investors are not as excited about UK companies. The UK stock market has a higher proportion of banks, energy, mining, materials and other mature sectors. Those aren't bad businesses, but they're not sectors that global investors get excited about. Over the past decade, technology companies drove a huge share of US stock market growth – and the UK had far fewer of them. So when global investors want exposure to fast-growing tech, they look to the US, not London.

  2. 📉 UK pension funds are not buying as many UK shares. UK pension funds – which invest workers' retirement savings – used to be major buyers of UK shares, providing a reliable pool of local demand. But over time, they moved away from UK equities towards bonds (tradeable loans that pay interest), overseas shares and other assets. Their allocation to UK equities fell from over 50% in 2012 to around 20% by 2023.

With less demand for UK-listed shares, prices stay below what the companies are actually worth. And because private UK companies are priced against similar listed ones, they end up underpriced too.

So, UK businesses end up looking like a bargain.

Why is US private equity buying them?

US private equity has two advantages that fit the UK market well.

💰 They have the funds. US private equity firms manage huge amounts of money, and once they raise a fund, they have to spend it – sitting on unused cash makes their investors unhappy. That money also stretches further than you'd think, because firms rarely pay in cash alone. PE firms typically use a "leveraged buyout" to spread their own money across much bigger deals.

🤔 What’s a leveraged buyout?

A leveraged buyout, or LBO, is when a buyer pays for a company mostly with borrowed money, and puts in only a smaller amount of its own cash.

Say a firm wants to buy a company for £100 million. Instead of paying it all from its own fund, it might put in £30 million and borrow the other £70 million from lenders.

The loans are usually secured against the company being bought, and repayments are made from the company itself. So the company effectively helps pay for its own takeover, because its future profits are used to repay the debt.

🎯 They look for UK companies that have US growth potential. US private equity firms don’t just buy any cheap UK company. They target UK-listed companies already doing lots of business in America. That’s because they plan to restructure or grow it, then sell or re-list it somewhere it'll be valued higher – like the New York Stock Exchange. This is sometimes called “transatlantic revenue arbitrage”.

Arbitrage means profiting from the same thing being priced differently in two places. Here, the same business may be worth less in London than in New York – and US private equity is trying to capture that gap.

So, what’s the problem with this?

If US private equity is buying companies at a fair price, who cares? There are two reasons people worry.

1️⃣ First, every “take-private” deal makes the London Stock Exchange a little smaller. The LSE has been shrinking for years. In 2024 alone, 88 companies left – they were taken over or relisted elsewhere. Now, fewer than 1,600 remain. And fewer companies makes the exchange less attractive to new ones, so even fewer list there next time.

2️⃣ Second, if these companies really are undervalued, US buyers may be picking them up cheaply. They can improve them, sell them on for much more, and return the profit to American investors. UK pension savers and ordinary investors, who could have owned those shares, miss out.

Why should UK commercial lawyers care?

This trend is changing UK corporate law in a few ways.

🤝 One UK “take-private” deal can create a wave of legal work. A take-private isn't a single legal job – it's a stack of them, all running in parallel. The target company needs its own corporate lawyers. The private equity buyer needs a separate set of corporate lawyers. Finance lawyers handle the loan documents the buyer uses to fund the deal. And other teams cover regulatory approvals, stock market announcements, employee issues and the shareholder vote. So one deal can give lucrative work to a lot of firms at the same time.

💼 The lead role usually goes to a US firm. American private equity buyers will have long-standing relationships with their favourite US law firms and use them for deals. So when a US buyer goes after a UK-listed company, it hands the deal to its usual US lawyers – and if that firm has a London office, the UK legal work runs from there too. UK firms might have a better chance of representing the company being acquired (advising the board and making sure the takeover rules are followed) but that’s the supporting role, not the lead.

⚠️ Over time, UK firms risk losing ground. Every take-private removes a UK-listed company from the market – and with it, a long-term client for London law firms that would have advised on its next fundraise, acquisition or rights issue. The work that is generated by the takeover itself tends to flow through the US firms acting for the buyers (London offices of firms like Latham, Kirkland, Paul Weiss and Weil have grown fast on the back of this). The shrinking of the LSE has a real financial impact on commercial law firms in the UK, shifting some of the biggest deals from UK firms to American ones.

How can you use this in your applications?

Here are some ways you can use the insights from this story in your law firm applications.

Insight

Why it’s important

How to use it in your applications

The London Stock Exchange is becoming a hunting ground for US-based PE buyers

UK-listed companies trade at roughly 30% below their US equivalents, and US private equity is buying that discount up.

Each deal makes the exchange a little smaller.

If asked about challenges that law firms are facing in the UK, mention the LSE's slow shrinking spiral.

Mention the gap in valuations and the deals draining the LSE to show you're thinking about where UK capital markets are heading.

That’s because equity capital markets (ECM) teams – who do public company work – are a major source of revenue for most commercial law firms. They’ll be affected by this trend.

US and UK firms can split the same deal between them

On a deal where a US buyer buys a UK target, US firms typically advise the buyer (they already have the relationship) while UK firms typically advise the target (local corporate lawyers, familiar with UK regulators).

The same deal can need both sides.

Say you’re applying to the London office of a US firm. When you’re asked "why this firm" in an interview, you could point to “take-private” work and “inbound US” work as a specific reason (this won’t apply to UK firms).

US firms in London advise the US private equity buyers – the same buyers driving the deals you have been reading about in the headlines.

IN OTHER NEWS 🗞

  • ⚖️ Pinsent Masons has referred itself to the SRA after a High Court judge caught its lawyers citing AI-hallucinated authorities. The judge spotted that an insolvency rule the firm cited didn't exist – then found that the firm’s follow-up letter explaining the error was also AI-generated. A junior solicitor had used AI for research, ignoring its warnings to verify the output against the original sources. Here’s the full judgment (which includes the transcript of the AI chat).

  • 💼 Revolut (the challenger bank) is picking its law firms based on performance-based review. Most big companies use a "legal panel" – a fixed list of firms they trust to handle their legal work. But with the new Revolut system, firms have to keep proving their worth to keep their spot (which is reviewed every three months). Tom Hambrett, the firm’s chief legal officer, said underperformance on client management, billing or advice quality will see firms swapped out for a bench ready to step in. One critic warned that ever-changing panel spots discourage the kind of long-term collaboration that delivers real value.

  • 🤝 Hogan Lovells and Cadwalader will merge in 35 days (the largest law firm merger in history). Once it goes live, Hogan Lovells Cadwalader will have around 3,100 lawyers across 18 countries and combined revenue of $3.6 billion (based on their firms' 2024 results), making it the world's fifth-largest firm by turnover.

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