Private enterprises adaptable and resilient in the drive for future growth

Once again, and after another economically challenging year, we see the leaders of private enterprises and family-owned businesses looking forward with confidence. Nearly nine in ten (87%) are positive about the outlook for their business and over four-fifths expect revenue growth in 2026. Diversification is high on the agenda – into new products and also new markets, both domestic and overseas. Businesses are investing for growth, with technology and AI the overwhelming focus. To fund that investment, many (59%) are able to rely on the strength of their own balance sheets. But this year we see a remarkable openness to bringing in investment from private equity – the second highest funding route at 46%, an increase from 41% last year.

In many ways, the results are similar to a year ago. But looking under the surface, there are also some fascinating differences which show that private enterprises are pragmatic, realistic and evolving with the times.

Firstly, while confidence is still high, there is no doubt that it has softened. Of the 87% who are confident about their future prospects, only 41% are ‘very confident’ – quite a significant drop from 59% a year ago. Looking at what businesses say are the drivers of their confidence, a positive outlook for the UK economy has declined from 42% to 30% while increased demand for their products and services has also fallen. Perhaps in recognition of near-term challenges in the UK market, appetite for international trade has increased amongst 70% of leaders. Europe is the most favoured destination, as you’d expect, but the US also features highly (showing that tariffs have not dented the attractiveness of the world’s largest market) while Asia has come more into view too (the UK’s trade deal with India possibly being a contributory factor here).

Meanwhile, private enterprises’ willingness to look at private equity funding is another feature of their adaptability. A decade or so ago, the thought of letting PE investors into the private or family business control room would have been unthinkable to many; now, it’s becoming much more accepted – almost the norm. Perhaps this is a sign not only that business owners have become more pragmatic, but that private equity has adopted a more collaborative way of working – and this is bearing fruit. In many ways, the challenge here is to the high street banks who are much lower down the order as a source of investment capital.

As last year, we see a significant proportion of leaders (32%) saying they are actively pursuing M&A as a route to growth, and a further large cohort (38%) saying they are open to opportunities although not actually pursuing. My view is that more business owners may begin to press the M&A button as a route to growth if the UK economy remains flat in 2026 (GDP growth only being expected to come in at around 1%). This will be accentuated by private equity’s keenness to bring some of the assets they’ve already invested in but not yet exited to market. I predict a busier 12 months of M&A than we’ve seen for a few years.