Deal Services Review 2025

The UK deals market enters 2026 with a sense of cautious optimism after a year of mixed fortunes. For much of 2025, deal activity was subdued as businesses grappled with high interest rates, sluggish growth and rising employment costs. Many owners delayed sale plans, waiting for clearer economic signals and improved performance. Yet, the second half of the year saw deal volumes climb as confidence returned and sellers moved quickly to complete transactions ahead of potential tax changes in the Autumn Budget.

Private equity is poised to play a big role in shaping the year ahead. After sitting on the sidelines for much of early 2025, funds now face mounting pressure to deploy capital and deliver returns. This urgency is likely to drive bolder offers and more flexible deal approaches, even in a market still navigating uncertainty. At the same time, complex carve-outs are expected to gain traction as corporates seek to unlock value and streamline operations.

Tax planning remains a central theme. The 2024 Budget changes to inheritance tax and capital gains tax, including increases in business asset disposal relief rates in both April 2025 and April 2026, prompted many private business owners to reassess succession strategies and liquidity options. Building on that, the 2025 Budget introduced further changes, including a reduction in capital gains tax relief on the qualifying sale of companies to employee ownership trusts. This will intensify the need for proactive planning.

These shifts, combined with rising dividend tax rates from April 2026, higher property and savings income tax rates from April 2027 and frozen income tax thresholds, are influencing deal timing, valuations, and structuring decisions. At the same time, global trade tensions and regulatory uncertainty continue to shape cross-border transactions, adding extra layers of complexity for dealmakers.

Industry activity is expected to centre around business services, including professional services and the built environment – alongside healthcare, technology and industrials with strong recurring revenue streams. Businesses aligned with regulatory change, ESG priorities and technology adoption (particularly AI) will attract heightened interest. While risks like geopolitical instability and potential tax hikes remain, the outlook for 2026 is one of measured confidence, with opportunities for those who prepare early and adapt quickly.