UK Corporate Finance outlook: What to expect in the second half of 2026

After a period of subdued dealmaking, defined by low business confidence coupled with inflationary pressures and global uncertainties, the UK corporate finance market is beginning to show early signs of recovery. 

This recovery has been emerging in London & the South East, where M&A has remained active, however highly selective. 

Acquirers are focused on high-quality and large businesses whilst demand in the mid-market continues to lag. The manufacturing and technology sectors remain resilient against the tougher business environment while the education sector is experiencing delayed completion timelines due to uncertainty around the Government’s proposed plans within this sector. Strategic acquirers and financial investors that are active in this sector are interested in deploying capital within mainstream schools following the issuance of the latest white paper produced by the UK Government. 

In the first half of 2026, an Experian report confirmed the decline in deal volumes which decreased by 30% nationwide but there was an increase in deal size and value by 36%, reflecting a shift in investor behaviour.  

Private equity is opting for high-value and high-growth scalable businesses which has driven increasing buy-and-build strategies, particularly consolidation of professional and business services sector. According to HSF Kramer and BDO, nearly 50-74% of deals within the professional and business services sector are PE backed. With a strong presence of technology, professional and business services firms in London & the South East, these regions will continue to dominate deal activity for the rest of 2026.  

The key trends shaping the corporate finance landscape for London & the South-East over the next six months. 

1. Selective M&A recovery

Merger and acquisition (M&A) activity is gradually picking up, supported by improving macroeconomic conditions and stabilising financing markets. 

That said, the market remains split: 

• Large businesses with high-quality assets continue to command strong interest and premium valuations, particularly where there is clear growth, defensibility, or technology differentiation. This includes technology companies that are AI/data driven, professional, finance and business services alongside energy and infrastructure. 
• Mid-market activity is recovering more slowly, with valuation gaps between buyers and sellers still impacting deal execution. However, with a differentiation strategy and by optimising capital structure, companies can continue to add value and remain resilient across sectors including manufacturing, consumer and education. 

Shruti Sivakumar said: “For SMEs in this sector considering a sale or acquisition, preparation and positioning the business is critical to attract offers that are aligned, addressing and closing any valuation and expectation gaps. “

2. Private equity: capital deployment resurgence

Private equity firms are entering a more active phase after a period of relative caution. With significant capital available, business confidence and financing conditions slowly improving, deployment is expected to accelerate in the next six months. 

Key trends include: 

• Continued buy-and-build strategies, driving consolidation across fragmented sectors such as the professional and business services sector. 
• Strong investor appetite for resilient, scalable and tech and artificial intelligence (AI) integrated businesses, particularly firms that can differentiate themselves well. 

For business owners and management teams, this creates opportunities to partner with PE, using capital to drive growth, transformation, or implement exit strategies. 

3. Debt markets: from refinancing to growth

Debt markets remain open and active, but to date activity has been largely refinancing-driven. 

Looking ahead: 

• Lower volatility in interest rates set is improving lender confidence. 
• Competition between traditional banks and private credit is increasing, allowing companies operating in the mid-market to access a wide range of competitive borrowing options. 
• Financing is gradually becoming more accessible for M&A, investment and expansion strategies. 

However, it is important to note that the cost of debt remains structurally higher than pre-2022 levels, which continues to influence deal structures. 

For borrowers, this means a greater focus on capital structure optimisation and disciplined financing strategies to seek growth and expansion opportunities. 

4. Equity capital markets: a slower recovery

The initial public offering (IPO) market lull remains with issuance at historically low levels following a challenging 2025. Aside from a couple of listings in early 2026, there was a delayed timeline of additional listings in Q1 2026 given the geo-political tensions at the start of the year. 

In the near term: 

• Any recovery is expected to be gradual and back-end loaded. 
• Many companies will continue to favour M&A or private capital routes. 
• Follow-on raises are likely to remain the primary source of public market capital. 

As a result, equity capital markets are unlikely to be a major driver of activity in the next six months. 

5. Other key themes shaping the market

Several structural trends continue to influence decision-making across the corporate finance landscape in London & the South East: 

• AI and technology differentiation are now central to valuation and investment decisions. As firms continue to integrate AI to automate processes, opportunities to add value to core business and operations increase, a common theme appreciated by investors. 
• London continues to attract strong inbound international investment, supported by availability of investment opportunities in lucrative sectors such as technology, media and telecoms (TMT). 
• There is an increase in carve-outs, bolt-ons, and portfolio optimisation, as companies refocus on core operations and unlock value. We are particularly seeing this theme across manufacturing and infrastructure sectors. 

These themes are reinforcing a market where strategic planning is just as important as financial performance. 

A selective recovery across the region

The outlook for H2 2026 is best described as a cautious recovery with targeted deals in high-value sectors such as technology, professional & business services across London & the South East. 

Capital is available given PE optimism and interest. As global tensions ease, confidence is gradually returning. Deals will be won by businesses that are clearly differentiated, have proven resilience and are scalable.  

Those who are proactive in refining strategy, strengthening positioning, and engaging early with the market will be best placed to capitalise on M&A opportunities.

How we can support you 

In an increasingly selective and competitive environment, having the right adviser by your side is critical.

Our corporate finance team supports clients across the full deal lifecycle, helping businesses prepare, execute and optimise strategic transactions. Get in touch today.