The South-East is leading the way in management buyouts (MBOs).

Research by KPMG's private equity group showed a slight increase in the value of MBO activity in the region and a higher value of completed deals than other UK regions.

The research, which looked at buyouts valued at more than £10 million, showed the total value of MBOs rose ten per cent, from £2,510 million in the first quarter to £2,762 million in the second.

Corporate finance partner Nick Standen, at KPMG's Gatwick office, said: "Nationally, we have seen a very modest increase in the MBO market and, despite the South-East's ten per cent increase in activity in the second quarter and favourable comparison with other regions, it is too early to get carried away.

"Confidence still has to return.

The private equity market is ready, the capital is there for investment but caution rightly prevails at the moment."

Despite the rise in value, which reflects one unusually high deal, the number of completions dropped from ten in the first quarter to six in the past three months.

Mr Standen said: "One telling factor is deals which traditionally took three to six months to put together, can now take nine months or even longer - a reflection of the heightened caution inherent in all elements of the investment process.

"Despite the increased value of deals undertaken, the number of completions has declined, primarily as a consequence of the jittery stock markets and general uncertainty. This suggests no return to the overall activity levels of two years ago before 2003."