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Record headline deal values mask a far more selective market underneath – and that still favours well-prepared sellers.

The first half of 2026 has produced one of the more contradictory pictures the UK mergers and acquisitions (M&A) market has shown in years. Headline figures point to a market in rude health, while underneath, deal-making has become noticeably more selective. For business owners across the Northwest and Yorkshire weighing up a sale, understanding this divide matters more than the headlines themselves.

A market of extremes

Global M&A value is on track to reach $4 trillion in 2026, up around 13% year-on-year and the strongest showing since 2021, according to PwC’s 2026 mid-year Global M&A Industry Trends outlook. Yet deal volumes are moving in the opposite direction, down roughly 13% to an estimated 42,000 transactions worldwide. The explanation lies in size: transactions above $5 billion now account for 48% of total global deal value, up from 39% in 2025 and just 26% in 2024. Strip out these megadeals, and underlying deal value actually fell.

PwC describes this as a “K-shaped market”, and artificial intelligence is a major driver of the split. Enormous sums are flowing into data centres, power generation and grid infrastructure to support the AI build-out, while buyers elsewhere have turned more cautious: AI-related references among the 100 largest deals fell from around a third in 2025 to 17% in the first half of 2026, as dealmakers reassess where the technology genuinely changes the investment case rather than simply features in it.

The UK shows the same pattern. Office for National Statistics figures record 407 completed transactions in Q1 2026 falling to 353 in Q2 – a 13% quarter-on-quarter drop in deal count – even as the value of inbound investment surged 62% over the same period, to £25.4 billion, as a handful of large transactions (including Engie’s acquisition of UK Network Holdings and Eli Lilly’s purchase of Centessa Pharmaceuticals) skewed the totals upward. Fewer, bigger deals: the same story as the global market, playing out at home.

What this means below the headlines

None of this describes the market most of our clients operate in. Businesses turning over £2 million to £20 million rarely feature in headline M&A statistics, and the forces driving today’s megadeals – AI infrastructure, sovereign-scale power investment – have little direct bearing on a manufacturer in Leeds or a professional services firm in Manchester. But the caution running through the wider market is real, and it is shaping how buyers of every size behave.

Private equity is a case in point. PwC notes that exit backlogs remain stubbornly high, with 34% of PE holdings now held for five years or more – well beyond a typical hold period. Firms under pressure to return capital to their own investors will eventually need to sell existing assets and redeploy capital into new ones, and resilient, cash-generative mid-market businesses are exactly what they – and trade buyers – continue to look for.

Elevated financing costs, a record $61 trillion in OECD sovereign debt, and ongoing geopolitical uncertainty are all sharpening buyer due diligence, per PwC’s report. The result, consistent with what we have seen through previous cycles, is a market that rewards preparation and has little patience for ambiguity. Speculative buyers without a clear strategic rationale have largely left the field; those still transacting are serious, well-funded, and looking for reasons to say yes rather than reasons to walk away.

Our own experience, across a very small representation of deals in the market up to around £5 million EBITDA, bears this out: both trade and private equity acquirers remain prepared to pay fair, if not sparkling, multiples for the right business.

The greater challenge across the smaller end of the market is the maintenance of earnings. While this affects only a small proportion of UK businesses, we have seen a number of otherwise strong, well-run companies struggling to grow, or even hold steady, on profitability – unhelpful for anyone hoping to exit at the top of the range. For some of these businesses, the better strategy may be to take their time: resist the pressure to rush to market, focus on driving profitability, and use the intervening period to prepare thoroughly for sale. Over the long term, that patience can meaningfully enhance shareholder value.

The opportunity for prepared owners

Counterintuitive as it sounds, a more selective market can still favour well-run smaller businesses. Three things stand out for owners weighing a sale in the second half of 2026:

• Quality still commands a premium. Where volumes soften, the businesses that keep transacting – and transacting well – are those with clean financials, diversified customer bases, and management teams capable of running the business without the founder.
• A thinner field means sharper buyer attention. Fewer speculative buyers mean the serious ones can concentrate their time on a smaller number of processes, which tends to produce more considered, more competitive outcomes for sellers who arrive at the table well prepared.
• Timing still matters. Crystallising value ahead of further tax or regulatory change, and before any economic softening deepens, remains a legitimate strategic reason to transact now rather than wait for a “better” market that may not arrive on schedule.

Conclusion

The UK M&A market in the first half of 2026 is not short of activity – it is simply more selective about where that activity lands. For the family-owned and founder-led businesses we work with across the Northwest and Yorkshire, the fundamentals that have underpinned successful exits in previous cycles still hold: strong financial discipline, a clear growth story, and thorough preparation before entering the market.

If you are weighing up the future of your business and would like to understand what today’s market means for your own exit options, we would welcome a confidential, no-obligation conversation with our team.

Sources: PwC, Global M&A Industry Trends – 2026 Mid-Year Outlook (June 2026); Office for National Statistics, Mergers and Acquisitions Involving UK Companies, January to March 2026 and April to June 2026 (released September 2026).