2026 UK M&A Outlook

As noted, we expect this to be the Year of the Carve Out as UK companies seek to simplify their businesses, unlock capital and respond to shareholder pressure for value creation. Indeed, we are seeing many companies refocus on their core strategies – divesting of non-core assets as a way to recycle capital back into transforming their areas of strategic focus. Sellers are putting more focus on sell-side synergies while buyers are sharpening their understanding of separation risks and opportunities. This is creating not only a stronger pipeline of assets but also much greater confidence about value creation potential.

As market growth rates start to diverge, we are seeing the larger, more experienced investors looking overseas for greater value creation opportunities that can complement their existing portfolios. At the same time, however, many investors are also starting to feel that cross-border dealmaking has become more challenging – particularly in terms of regulatory approvals and integration capabilities – which is leading some to refocus their capital on domestic markets where rules are clearer and integration more straightforward. Given the ongoing geopolitical and market uncertainty, we expect to see domestic dealmaking accelerate faster than cross-border.

In 2026, we expect to see a significant uplift in private equity exits as investors move to deliver returns and kick off new fundraising efforts. As my colleagues noted in the recent UK Private Equity Landscape 2025 report, the vast majority (60 percent) of the exits conducted in 2025 were to trade acquirers, followed by secondary buyouts which made up 36 percent of the exits over the year. As such, we anticipate significant M&A activity to continue as PE houses bring their assets to market. 

Artificial intelligence is influencing deal flows in a multitude of ways. On the one hand, buyers want a clear view of the impact that generative AI will have on their targets before sitting down to sign the deal. AI-resilient assets will see significant competition while those at risk of disruption may struggle to find buyers. At the same time, AI is also helping dealmakers get much more granular insights into potential targets which both drives increased competition for quality assets and gives dealmakers greater confidence in their ability to generate value from their investments. 

Talent is perhaps the top factor that influences whether a deal is a success or not. Buyers need to ensure their target has – and retains – the right talent to deliver on their growth strategy. And, at the same time, investors need the right operational talent to identify and deliver on value creation strategies. That is leading many dealmakers to think about talent in different ways – understanding how generative AI will influence their workforce strategy, how they can partner for capabilities and how they incentivise employee retention, for example. 

As dealmaking becomes more complicated, AI gets more influential and value becomes more challenging to unlock, we are seeing buyers become much more sophisticated and focused on integration risks and opportunities. Indeed, in today’s environment, deals are more likely to fail based on execution risk than headline price, pushing execution discipline up the agenda for the leading investors. Increasingly, buyers want confidence not just in the asset today, but in how value will be delivered after completion, including how teams, systems, and customers will be managed.