UK mid-market M&A outlook

The UK mid-market enters 2026 with renewed momentum following a selective and often cautious 2025.

Over the past year, deal activity was constrained by elevated financing costs, valuation gaps between buyers and sellers, and heightened uncertainty across macroeconomic and geopolitical conditions. As these pressures have begun to ease, the market is transitioning from a period of reset toward a more constructive phase focused on execution.

Easing inflationary pressures, stabilising interest-rate expectations and greater clarity around the regulatory environment have contributed to improving confidence across the UK M&A market. While financing conditions remain disciplined, debt affordability has improved at the margin, supporting more viable transaction structures and enabling buyers to re-engage with greater conviction. At the same time, sellers, particularly owners of high-quality businesses, are increasingly willing to test the market as visibility improves.

That said, 2025 was defined as much by selectivity as by overall activity. Buyer appetite remained evident, but execution conditions were demanding. Heightened scrutiny of earnings quality, growth assumptions and deal structures meant that not all processes progressed as initially expected. Transactions where the quality and sustainability of earnings were less clearly articulated, financial information was under-prepared, or valuation expectations were misaligned with prevailing market conditions often struggled to gain traction, with some deals pausing or falling away altogether. This reinforced the importance of preparation, realistic positioning and early alignment with buyer priorities in a disciplined market environment.

Importantly, the outlook for 2026 is not one of broad-based recovery. The UK mid-market is expected to remain selective and theme-driven, with activity concentrated in areas where capital, strategy and sector fundamentals are aligned. Competitive tension is returning, but primarily for assets that meet increasingly well-defined acquisition criteria. Businesses lacking differentiation, scale or resilience may continue to face a more selective buyer universe, even as overall confidence improves.

Our experience in a selective 2025 Market

During 2025, we remained active despite a conversative market, advising on transactions spanning technology and digital services, financial services, professional services, industrials and other more resilient sectors. Advising through this environment required a deep understanding of evolving buyer behaviour and how private equity, strategic and cross-border acquirers were assessing risk, value and growth.

Our experience supporting clients through complex diligence processes and helping resolve challenges as they arise has further strengthened our understanding of the practical factors that drive successful transaction outcomes as activity builds into 2026.

The forces shaping the UK mid-market M&A in 2026

Looking ahead, three structural forces are expected to define the shape of UK mid-market M&A activity in 2026.

• Private equity will remain a central driver of activity.
  Elevated levels of undeployed capital, a backlog of long-held assets, and gradually improving financing conditions are increasing pressure on sponsors to transact. While selectivity remains high, private equity is expected to drive both buy-side deployment and sell-side exit activity, particularly through buy-and-build strategies and sponsor-to-sponsor transactions.
• A broadening acquirer landscape is emerging.
  Strategic corporates, both domestic and international, are re-engaging with M&A as earnings visibility improves and confidence returns at board level. Cross-border transactions remain a defining feature, supported by inbound investment from overseas buyers and outbound expansion by UK-headquartered companies seeking growth, capability acquisition and geographic diversification.
• Deal activity in 2026 is expected to remain decisively sector-led.
  Rather than broad economic recovery driving volumes, M&A will concentrate in industries undergoing consolidation, regulatory change or structural transformation. Technology, professional services, financial services, consumer products and specialist industrials are all expected to remain active, albeit for different strategic reasons.

Taken together, these dynamics point to an increasingly active market, but more disciplined and focused than previous cycles. Preparation, positioning and a clear understanding of buyer priorities will remain critical to achieving successful outcomes as the market moves back into execution mode.

Dan Nixon, Corporate Finance Partner:

As momentum builds into 2026, the UK mid-market is entering a more active and execution-focused phase. With conviction strengthening and capital returning to the market, we look forward to partnering with owners and investors to convert opportunity into action and help them achieve their strategic goals.

For more insights or to discuss how we can support your business, please get in touch with the Corporate Finance team or your usual Crowe contact.