UK M&A in 2026: Confidence Returns, Valuations Reset, and Why the Mid-Market Is Moving Again

UK M&A in 2026: Momentum Returns, Valuations Reset, and the Mid-Market Takes Centre Stage

After two years of caution, recalibration and deferred decision-making, UK mergers and acquisitions activity is showing clear signs of life in 2026. Deal volumes are stabilising, confidence is improving, and—crucially—buyers and sellers are finally finding common ground on valuation. While mega-deals remain selective, the UK mid-market is emerging as the engine room of renewed activity, driven by private equity dry powder, succession issues among founders, and strategic consolidation across professional services, healthcare, insurance and technology-enabled businesses.

This update looks at what is actually happening on the ground in UK M&A in early 2026, what has changed versus the last two years, and what business owners, management teams and investors should be doing now.

The big shift: realism replaces stalemate

The defining feature of UK M&A in 2024–2025 was the valuation gap. Sellers anchored to pre-rate-hike multiples, buyers underwriting deals at higher costs of capital, and financing markets that simply would not stretch. The result was not a collapse in interest, but paralysis.

In 2026, that stalemate is breaking.

Three things have shifted. First, interest rates and inflation have stabilised enough for lenders to price risk consistently. Second, sellers—particularly owner-managed businesses—have accepted that 2021 multiples are not coming back quickly. Third, private equity sponsors under pressure to deploy capital are showing flexibility through earn-outs, vendor loan notes and structured consideration rather than headline price alone.

This does not mean valuations are “cheap” across the board. High-quality, cash-generative businesses with pricing power are still commanding strong multiples. But the market is functioning again, which is what really matters.

Private equity: quieter headlines, heavier execution

UK private equity activity in 2026 is less about splashy announcements and more about disciplined execution. Funds raised during the zero-rate era are now firmly into their investment periods, and LPs expect deployment.

A notable early-2026 transaction was Bridgepoint’s acquisition of Interpath, a UK advisory and restructuring business, at a valuation reported to be around £800m. The deal is emblematic of where PE appetite remains strongest: professional services, advisory, compliance and “picks-and-shovels” businesses that benefit from economic complexity rather than pure growth cycles.

Across the market, sponsors are focusing on:Buy-and-build strategies in fragmented sectors such as accountancy, payroll, insurance broking, recruitment and healthcare servicesPlatform investments where operational improvement and bolt-ons matter more than leverageBusinesses with recurring or contracted revenue and limited capex requirements.

What is notable is the re-emergence of minority investments and structured deals. Rather than insisting on full exits, funds are increasingly willing to partner with founders who want liquidity but not retirement—particularly where management continuity is critical.

Foreign buyers are back—and they are selective

Overseas acquirers, particularly from the US and parts of Europe, are once again active in the UK. Sterling’s relative weakness, combined with the UK’s deep pool of specialist SMEs, continues to make it an attractive hunting ground.

However, this is not a broad-based buying spree. Foreign buyers are targeting specific niches:Specialist IP and software with UK credibility but global applicationRegulated professional services platforms with scale potentialHealthcare and life-sciences suppliers embedded in NHS or European supply chains.

At the same time, regulatory scrutiny remains front of mind. The UK’s National Security and Investment regime and the ongoing assertiveness of the Competition and Markets Authority mean that cross-border buyers are doing more pre-deal analysis and contingency planning than ever. Deals are happening—but they are better prepared and more tightly scoped.

The mid-market is where the real action is

The most consistent activity in 2026 is firmly in the £5m–£100m enterprise value range. This is where demographic reality meets capital availability.

Thousands of UK business owners are now in their late 50s, 60s or 70s, having deferred exits through Covid, Brexit and the rate shock. Many no longer want to wait. At the same time, management teams are often capable but under-capitalised, creating opportunities for MBOs, partial exits and PE-backed succession solutions.

Common themes we are seeing include:Founder exits where 60–80% is sold now, with a retained minorityShareholder disputes forcing earlier-than-planned salesCarve-outs of non-core divisions by UK groups refocusing on core activities.

Importantly, deal success in this segment is less about headline price and more about structure, speed and certainty. Buyers who understand this are winning transactions.

Sector focus: consolidation accelerates

Several sectors stand out in early 2026.

Professional services remain highly active. Accountancy, tax, compliance, payroll and advisory firms are consolidating as technology investment requirements increase and succession issues mount. Scale matters more than ever.

Insurance and insurance services continue their roll-up trajectory. UK brokers and MGAs are both buyers and sellers, often backed by PE capital seeking predictable cashflows.

Healthcare services, particularly clinics, care providers and specialist outpatient services, are seeing renewed interest. While regulatory risk is carefully assessed, demand fundamentals remain strong.

Legal and tech-enabled services are entering a new phase of consolidation driven by AI adoption. Firms that can invest in technology and process automation are pulling away from those that cannot, creating both acquisition opportunities and forced sales.

Financing: still disciplined, but available

Debt markets in 2026 are best described as “open but rational”. Senior lenders are back, but leverage multiples are conservative and covenants matter again. Unitranche remains available for quality assets, but pricing reflects reality rather than exuberance.

The result is more thoughtful capital structures:Lower leverage combined with vendor financeEarn-outs tied to EBITDA delivery rather than revenue growthEquity rollovers that genuinely align incentives.

For sellers, this means understanding that the best deal is not always the highest headline number. For buyers, it means being creative without being reckless.

What this means for business owners

If you are a UK business owner considering a sale or partial exit in 2026, the message is clear: preparation matters more than timing the market.

Buyers are active, but they are selective. They want clean financials, credible forecasts, and clarity around risk—whether that is customer concentration, regulatory exposure or management depth. Businesses that address these issues early are achieving materially better outcomes.

Equally, waiting for “the perfect year” is increasingly risky. Markets are open now. Capital is available now. Succession pressures are not going away.

What this means for buyers and investors

For acquirers, 2026 is about discipline and differentiation. Proprietary deal flow, sector insight and the ability to structure transactions intelligently are the competitive advantages that matter.

The days of winning deals purely by paying the most are over. Sellers care about certainty, legacy, and alignment. Buyers who can speak to those concerns—and execute quickly—are consistently winning.

Where Lexis Capital Group can help

Lexis Capital Group works with business owners, management teams and investors across the UK mid-market to navigate exactly these conditions. We specialise in acquisitions, disposals, succession planning and shareholder dispute situations where conventional processes often fail.

Our approach is deliberately pragmatic. We focus on realistic valuation, intelligent structuring and protecting our clients’ long-term interests—not just closing a transaction. Whether you are a founder considering a full or partial exit, a management team exploring an MBO, or an investor seeking proprietary deal flow in fragmented sectors, we help you prepare properly, position effectively and negotiate from a position of strength.

In a market that is moving again—but not forgiving mistakes—experience, judgement and execution matter. Lexis Capital Group exists to provide all three.