The UK mergers and acquisitions (M&A) market saw a mixed landscape in 2025, with overall deal volumes falling but ‘megadeals’ returning and investor appetite strengthening in certain sectors.
Artificial intelligence (AI) also played a key role in shaping UK dealmaking, influencing valuations, buyer strategies and the competitiveness of target companies. Acquirers also started to invest in AI ready business models.
Our corporate finance team shares its UK M&A predictions for 2026 and examines how market conditions are expected to evolve.
UK M&A market overview: Increased activity expected in 2026
Darren Hodson, Head of Corporate Finance, expects UK M&A activity to rise in 2026 as global investors continue to view the UK as a stable and resilient market. With the US facing greater economic uncertainty, Darren believes the UK will remain an attractive destination for inbound investment thanks to its steady economic outlook and strong regulatory environment.
Key UK M&A trends expected for 2026 include:
- Falling interest rates increasing buying power for both private equity and corporate acquirers
- A rise in buy‑and‑build strategies driving consolidation in the UK mid‑market
- Ongoing activity in our key sectors including professional services, consulting, software, self‑storage, franchises, and food & beverage
- Continued focus on ESG‑led investment strategies among both trade buyers and private equity
- Strong demand for AI‑ready and AI‑resilient business models
- Increased cross‑border M&A, particularly from US buyers
Darren comments: “90% of our team predicts that dealmaking levels will be higher or broadly in line with 2025, and despite domestic caution, there is still significant dry powder within private equity and corporate balance sheets.”
The growing influence of AI on UK M&A deals
AI is expected to remain a major driver of M&A activity in the UK throughout 2026. According to Corporate Finance Director Tom Joy, AI tools are increasingly being used to streamline the dealmaking process, from generating buyer lists to drafting transaction documentation.
Tom highlights a notable trend from 2025: software and SaaS businesses whose models were vulnerable to AI disruption saw valuation pressure, while companies with defensible intellectual property, proprietary data, and deep customer relationships experienced stronger multiples. This valuation divergence is expected to continue in 2026 as investors prioritise AI‑resilient or AI‑enabled business models.
M&A trends in the UK education sector
The UK education sector saw significant activity in 2025, driven by increased demand for SEND provision, technology‑enabled learning, and solutions addressing teacher shortages. This aligns with broader themes in the UK market, where wellbeing, accessibility, and digital transformation are driving investment decisions.
David Crump, Corporate Finance Director and advisor on the sale of R.E.A.L. to The Aurora Group, anticipates continued consolidation across independent schools, growing investor interest in scalable SEND providers, and selective EdTech acquisitions. As the sector modernises, digital adoption and specialist support services are expected to attract strong buyer demand.
Employee Ownership Trusts (EoTs): Continued activity in 2026
Despite changes to EOT taxation, including the introduction of a 12% effective CGT rate for transactions completed after 25 November 2025, activity levels remain strong.
Adam Rollason, Head of Transaction Tax, reports that interest in Employee Ownership Trusts has not slowed, and demand is expected to stay high throughout 2026 as business owners continue to explore succession planning options and tax‑efficient exit structures.
UK waste and recycling M&A: Growth driven by sustainability
Corporate Finance Partner Claire Spencer predicts increased M&A activity in the waste and recycling sector in 2026. The push for sustainability, advanced recycling technologies, and higher environmental standards is expected to fuel investment, with niche and specialist recycling facilities commanding premium valuations.
Franchise and hospitality M&A: Steady growth ahead
With more than 20 years of dealmaking experience in the franchise sector, David Crump expects steady growth in UK franchise M&A throughout 2026. Key drivers include:
- Buy‑and‑build strategies
- Selective private equity investment
- Consumer demand for higher‑quality, value‑driven brands
- Rising interest in health‑focused and transparent food & beverage franchise models
Despite cost pressures, strong brands with scalable operating models remain in high demand.
What’s next for the UK M&A market in 2026?
Overall, M&A activity in the UK is expected to accelerate across multiple sectors. Cross‑border transactions, particularly inbound US investment, will play a major role, while AI‑enabled businesses will continue to attract premium valuations. With interest rates forecast to fall, many businesses may see 2026 as a pivotal moment to revisit growth strategies, explore acquisitions, or consider strategic exits.
If you’re exploring opportunities for your business this year, from valuations and acquisitions to growth planning or exit strategy, our corporate finance team can help you achieve your goals.
Get in touch to arrange a free consultation.
