Graphite’s Mike Tilbury: Re-rating ‘surely coming’ for targets with ‘rights-clean’ data
Graphite Capital expects a re-rating for businesses that produce unique, ‘rights-clean’ data, particularly as the public web clogs up with AI-generated output, Mike Tilbury, managing partner, told PE Hub.
The London-based investor primarily targets the UK mid-market, focusing on companies valued at between £30 million ($40.4 million) and £150 million. Its recent deals include two exits. In May, Graphite announced the sale of Beacon, a life sciences data platform, to Corten Capital and Ampersand Capital Partners, while in January the firm sold a majority stake in Independence Products Limited to Astorg.
Tilbury told PE Hub about Graphite’s pipeline, the main challenges of H1, as well as the “looming liquidity” question for funds holding tech assets.
What’s your outlook for dealmaking in the second half of the year?
H2 will be shaped partly by the ongoing macro uncertainty but also by how vendors choose to run their processes. The backdrop is undeniably noisy. Middle East geopolitics, AI-related disruption in technology valuations and higher-for-longer interest rates are all contributing to elevated financing costs and making it harder for buyers and sellers to align on timing. But it feels like optimism is rising. The sharper point is that the best assets increasingly go to whoever has already built the angles, so origination and pre-process work has never mattered more. The deals that close in H2 will be won by the work you did 12-18 months ago. We expect the second half to reward patience, preparation and selectivity.
What are you seeing in the pipeline and what does that tell you about deal volume in H2?
The pipeline is building well. Sellside advisers are being appointed noticeably earlier than historically, and there’s a meaningful backlog of businesses that spent the last year or two getting their trading onto a clean footing and preparing for sale. The harder question is conversion. High-quality, resilient assets continue to transact at strong valuations, while the next tier takes considerably longer or stalls. So we’d expect H2 volumes to be ahead of H1, but back-end weighted and skewed firmly towards quality and processes that are well-prepared rather than rushed to market. The gap between processes launched and processes closed is the figure to watch.
What were the highlights and challenges for dealmaking in the first half of the year?
It’s been a bifurcated half. The clear highlight is that deals are getting done again, and buyers have shown they will pay full prices for the best assets and therefore quality has been well rewarded. The defining challenge has been the AI impact on technology: the software deal market is all but closed, and tech-focused PE funds are taking stock. That has created a ripple effect in adjacent sectors as those funds attempt to maintain their deployment rate so are competing for assets elsewhere. Expensive debt has been a persistent headwind throughout, and diligence has become longer and more forensic, with buyers underwriting more cautiously. The net effect: difficult for anything carrying an AI question mark, and reasonably buoyant for resilient quality that’s properly prepared for sale.
Which sectors/subsectors look attractive in the second half of 2026?
In almost every subsector the gap between the winners and the losers feels wider than the difference between one subsector and the next. Attractiveness has increasingly become more about the business than the category. Our focus is on AI-defensive, capital-light models with sustainable cash generation, targeting the tech-enabled services, healthcare and education sectors. Here, we have a strong track record and the fundamentals remain attractive. Two characteristics consistently draw us in: services businesses that sit alongside customers as trusted advisers, whose value rises as risk, regulation and technology become more complex; and product businesses with clear market leadership and a real moat. The question we keep returning to is the same: can this management team stay ahead of the curve?
Have you spotted any trends that the market is underestimating?
Two things feel underappreciated. The first is the looming liquidity question for funds holding tech assets. Many will increasingly have to choose between accepting sensible prices for liquidity now, or holding for years while they build a more robust AI story. Taken across many portfolios at once, that could shape exit activity meaningfully, and it is not clear that this has yet been priced in. The second: as the public web gets exhausted and polluted with AI-generated output, the valuable thing becomes unique, ‘rights-clean’ data, generated inside real workflows. The market still values many of these businesses as ordinary information or subscription companies, when what they own is a critical and defensible input into everyone else’s AI. That re-rating is surely coming.
Editor’s note: This story is part of PE Hub’s ongoing series of Q&As with PE thought leaders. For more, see:
