UK Mid-Market M&A: 2025 review and 2026 outlook
2025 in Review: Resilience amid uncertainty
The UK mid-market M&A and private equity landscape in 2025 demonstrated resilience despite economic headwinds and geo-political uncertainty. While overall deal volumes declined, mid-market activity remained comparatively stable, particularly in business services, technology, financial services and healthcare. Early-year uncertainty and valuation gaps slowed momentum, but stabilising inflation and interest rates helped restore some confidence in the second half of the year.
Despite this uncertainty, Private Equity continued to remain active, with bolt-on acquisitions accounting for over half of PE deals as firms pursued scalable, lower-risk growth. Cross-border appetite persisted, with international buyers targeting UK mid-sized businesses across many sector.
Sectors with structural growth, such as AI, renewables, and digital infrastructure, continued to attract sustained interest from both strategic and financial buyers, and anticipated tax changes in the Autumn Budget prompted a late surge in completions as sellers accelerated exits to lock in current rates.
2026 Outlook: Cautious optimism
The outlook for 2026 is positive, underpinned by stabilising interest rates and easing inflation. Private equity firms, sitting on over £1 trillion in dry powder, are expected to accelerate mid-market and bolt-on deal activity.
Resilient businesses with clear growth narratives, particularly in AI, healthcare, energy, and business services, will remain highly sought after. Cross-border interest should stay strong, with the UK continuing to rank among Europe’s top destinations for mid-market investment.
With a robust pipeline and sector-focused demand, we anticipate an active year for mid-market dealmaking and strategic advisory support.
Looking ahead
As the market navigates evolving economic conditions and geo-political uncertainties preparation and agility will be key. Businesses that can articulate a compelling growth story and demonstrate resilience will be best positioned to attract strong buyer and investor interest in 2026.
Alex Hartley
Partner
Head of Corporate Finance, UK
alex.hartley@kpmg.co.uk
