HMV was the target of a private equity approach in early 2006

The Centre for Management Buy-Out Research said deals in the first half of 2006 hit 15bn euros (�10bn; �19bn).

The figure was down from the 19bn euros of deals seen in the same period of 2005, and contrasts with a 70% jump in deals made on mainland Europe.

Experts say UK shareholders have become more resistant to private equity bids.

Rejected bids

"Private equity in the UK is a bit of a victim of its own success," said Tom Lamb, co-head of Barclays Private Equity, which co-sponsored the research along with consultants Deloitte.

"In the UK investors now feel that a company must be undervalued if a private equity bidder shows an interest."

This has resulted in a number of recent private equity bids, such as Permira's �843m offer for music retailer HMV and the Apax consortium's �1.5bn offer for ITV, being rejected by management with little shareholder protest.

In Europe, this type of public to private buy-out has surged, with 23.5bn euros worth of business in the first six months of 2006, compared with 8.2bn euros last year.

Mr Lamb said the UK private equity market was more mature than that in mainland Europe, which was now "catching up".

Difficult decisions

Despite the decline in business so far in 2006, he expected the UK buy-out market to continue growing.

TOP EUROPEAN BUYOUTS 2006 Danish telecoms firm TDC - 13bn euros Dutch media group VNU - 8.7bn euros French car rental company Europcar - 3.3bn euros Source: CMBOR

Private equity investors use a mixture of their own money and a larger proportion of debt to take over companies that they feel are underperforming or offer big growth potential.

They usually look for a quick, profitable sale within three to seven years.

As they do not have to keep shareholders happy or meet stock market disclosure rules, private equity firms argue that the companies they control are more able to make difficult or long-term decisions.