If 2025 was a somewhat subdued year in terms of UK deals activity, there was increased optimism that 2026 could be the year when the market turns upwards.
So far, despite a fair amount of external volatility, this has broadly proven to be the case. Q1 was a busy period, where intentions seemed to be translating into action. Our deals advisory team here at KPMG in the Midlands saw a steady flow of transactions and new instructions.
Director - Head of Corporate Finance – Midlands ; Head of Transport & Logistics M&A UK
KPMG in the UK
This underlines the resilience and also the breadth of the private enterprise market in the Midlands – something that often feels a little overlooked. Yes, the industrial manufacturing base here is exceptionally well-established and is also moving with the times – modernising processes, eyeing new markets to service, and competing on the international stage. But the East and West Midlands are also very diversified. Professional and business services are strong across the region, with Birmingham and Nottingham major hubs. Food and drink is an important industry in the East Midlands, while the combined region also plays host to a myriad of exciting ventures across sectors as varied as technology, consumer and healthcare.
A good example of a deal demonstrating the Midlands’ range was private equity house LDC’s investment into Lincoln-based drone business Eagle Eye Innovations in February – right at the cutting edge of digital technology. We were delighted that this deal, which KPMG advised on, was shortlisted in the Insider East Midlands Deals Awards 2026.
The M&A market operates best on confidence and stability, so inevitably recent geopolitical events will have an impact at the edges – the war in Iran being likely to push energy and food prices up, and with that inflation. Interest rate reductions may not happen – and indeed the base rate could even rise. That remains to be seen. However, there have been many global events in recent years that have been navigated, and I believe that we can still look at the market with confidence due to three key factors.
Firstly, there is a stable lending market. Interest rates may remain where they are or even slightly increase – but we’re not in interest rate ‘shock’ territory. Debt is generally affordable and rates are reasonably predictable.
Secondly, there is an active buyer audience. Private equity houses in particular are keen to deploy accumulated capital into strong, quality assets. They are also frequently getting behind trade buyers, backing them in portfolio-based buy and build strategies especially in the professional services sector. This remains the most active sector in the market currently and that can be expected to continue.
Thirdly, there is a willing seller base. The motivation to sell varies of course and could be for a myriad of reasons. Changes to inheritance tax (IHT) is one factor motivating some founders or family owners to contemplate making an exit (whole or partial), for example.
Given these factors, my expectation is that 2026 will continue to see healthy levels of activity – creating opportunity for both sellers and buyers. In particular, competition for quality assets will stay high. By ‘quality’ I mean businesses that are achieving revenue or market share growth, that know their market, have a clear strategy moving forward, have appropriate technology platforms and operating systems in place, and have capable and hungry management teams.
Needless to say, any seller or buyer needs a good advisor in their camp. In practice, that means working with advisors who are plugged into the market with good connections to the trade and private equity scene. It means finding an advisor who doesn’t follow a one-size-fits-all approach but formulates a strategy based on the client’s unique business dynamics and transaction aims. And – perhaps most important of all – it means working with an advisor you can trust. The trust element is critical because in any sale process there will be hurdles and challenges along the way; openness in both directions between client and advisor is essential. A strong relationship helps the process keep moving through the ups and downs towards the conclusion that everyone is working so hard towards.
If you’re the founder or leader of a private enterprise looking to sell or divest, or a buyer seeking a new strategic asset, do get in touch. We’ve been servicing the Midlands mid-market deals scene for many years and have built extensive connections across the business ecosystem. With strong assets continuing to transact well, I believe we can look ahead to the rest of 2026 with a fair degree of confidence.
Let’s build your deals strategy together
Discover why organisations across the UK trust KPMG to make the difference and how we can help you to do the same.
