Only two months ago, British investors were fleeing equity funds at unprecedented rates. Between July and October 2025, £7.3 billion exited UK equity markets as budget uncertainty dragged on for months. Now in 2026, the landscape has changed dramatically. What appeared to be a crisis of confidence now looks increasingly like a market recalibration, and there is renewed confidence in UK market for M&A resurgence this year.
The numbers tell a story of stabilisation and emerging opportunity. While UK M&A volumes fell more than 19% in the first half of 2025, the market has shifted from retreat to strategic repositioning. Average deal sizes grew nearly 9% during this period, signalling that dealmakers are pursuing fewer but higher-quality transactions.
Clarity in Policy
The catalyst for renewed UK confidence can be traced to greater clarity in policy which has allowed deal pipelines to begin moving again. Businesses finally possess the certainty required to progress with pending transactions. Markets reward transparency as much as favourable policies, and this is already translating into resumed deal activity. British assets, long perceived as undervalued by global investors, are attracting attention from international buyers.
The Tech Factor
London’s position as Europe’s tech hub is also having an impact. The UK’s Framework for AI and Digital Growth aims to expand computing power twentyfold by 2030, creating a pull for technology sector M&A. Globally, technology, media, and telecommunications deals on Datasite, which facilitates about 19,000 deals annually, increased 6% year-on-year in the second half of 2025.
Technology is not merely a sector experiencing activity, it’s transforming how deals are managed. Artificial intelligence has evolved from optional enhancement to essential infrastructure. Nearly half of dealmakers now use AI tools daily, with many expecting transaction timelines to accelerate by up to 50%. The emergence of agentic AI, systems capable of autonomous decision-making and complex task execution, represents a quantum leap in deal efficiency.
AI is revolutionising every phase of M&A execution. In deal sourcing, predictive models identify acquisition targets based on financial performance and sector momentum. During due diligence, AI organises files, and analyses data at speeds impossible for human teams alone. For valuation and forecasting, predictive analytics enhance scenario modelling and market analysis. Post-merger integration benefits from systems that track synergy realisation and long-term returns.
Private Equity’s Role
Private equity is also set to be key factor in market activity. After remaining largely absent from public takeovers earlier in 2025, PE firms made a substantial return to the market beginning in September. They’re now facing mounting pressure from investors to deploy reserves of unspent capital for M&A activity across numerous sectors, brining liquidity back into the markets.
Looking Ahead
The challenge lies in execution. Navigating sharp economic volatility, managing valuation uncertainty amid trade tensions, and addressing regulatory complexity requires sophisticated capabilities. Yet these very challenges create barriers that protect returns for those who can overcome them.
The UK M&A market can now enter 2026 with sustainable momentum built on clarity, technological capability, and strategic discipline. British investors may have withdrawn record sums just months ago, but that capital needs deployment. Private equity needs to provide capital and strategic buyers need growth. And London, with its unique combination of undervalued assets, regulatory stability, and technological ambition, is well positioned to deliver this.
Ideal deal conditions are rare. Ultimately, success in 2026 will belong to those who act decisively, leverage AI effectively, and recognise that uncertainty creates competitive advantages.
By Jerome Pottier, EMEA Chief Revenue Officer at Datasite
