Every year the LAVA team put their reputations at risk by sharing their predictions for the year ahead. From trending sectors to transformative tech, every team member applies their unique perspective to some of the key themes looking likely to shape the next twelve months.
With last year’s predictions proving (somewhat) accurate, all eyes now turn to 2026. Every member of the LAVA deal team has brought you their big calls, bold takes, and wild suppositions for the next 12 month in M&A….
Simon Woodcock
Partner
This year we’re going to see a lot of Private Equity houses forced to invest outside of their usual comfort zones. Most of the mid-market players we speak to didn’t deploy anywhere near their targets in 2025, and while this would initially be seen as a prudent investment approach, in reality a lack of deployment will start to cause massive issues in raising their next funds. Given the ongoing economic and security climate, they’re unlikely to get perfect conditions in terms of investment options, so will need to shift focus to hands-on operational improvements and proactive growth measures, rather than relying on the luxury of buying up fast-growing, self-sustaining businesses.
Most know they’re running out of time, so it’ll be interesting to see when the breaking point comes and they start deploying capital in less than ideal circumstances and working to create value of their own.
Paul Joyce
Partner
2026 is going to finally see the reckoning for mid-market private equity in the UK. There’s been an increasing trend over the last 18 months for younger, ambitious investment professionals to leave established houses to go it alone. I think 2026 will see a continuation of that trend and we’ll begin to really see whether hunting in smaller, more dynamic packs is going to beat running with the herd. Something has to give. Will the established houses prosper or will we see some familiar PE Houses go the way of famous names like Bear Stearns, Lehman Brothers and Merrill Lynch and be consigned to the “do you remember…” category? There’s only so much LP money to go round and if those new funds can prove they can outperform their established peers, then I think we’ll see start to see some big names fall. And that’s before we even start to talk about the US funds muscling into the UK market…
Hamish Martin
Partner
In the last couple of years we’ve talked a lot about the hope of entering a period of stability, and that’s played out to a certain extent as far as the UK economy goes. But with ever-increasing geopolitical instability, I think 2026 is the year we have to get comfortable with ambiguity. The next global event is always just around the corner, and we need to be able to keep the wheels of business turning regardless. This environment of course has different impacts on different sectors, in particular it’s hard to imagine the defence and aerospace industries quietening down with everything going on, and the race to acquire the latest technical innovation will only heat up. So while I don’t think we’re in for a smooth ride in 2026, I think we’re getting very good at rolling with the punches and I’m confident we’ll see major technical progression and rapid growth across some key UK industries.
Tom Rowe-Jones
Director
I think we’re going to see M&A becoming integral to the progress of the UK defence industry this year. The combination of increasing global conflict, the procurement ineptitude of the government, and the freeze on spending, mean that M&A is going to become a key lever in enabling innovative companies to scale. With local policy hampering potential, many of these sales are going to come from international allies actively deploying funds, like Germany for example, so unless the government rapidly revises their funding and procurement processes, the focus of innovative founders is likely to be on attracting investment from parties with an existing international presence.
Loïc Bourdonnec
Associate Director
I’m cautiously optimistic about UK M&A in 2026, with improved financing conditions and strong PE activity driving up deal volumes and, hopefully, valuations, particularly across high quality businesses with a solid revenue base. Founders who plan ahead by understanding their exit options, setting clear KPIs across the stakeholder base, and aligning personal and business goals, are the most likely to achieve optimal outcomes.
Millie Counsell
Assistant Manager
I think 2026 is going to be the year of the US PE house, with a massive influx of US investors coming in below their usual cheque size to play in the UK market. We saw the beginnings of it in 2025 and that activity is only increasing, so this is going to put enormous pressure on UK PE’s to not only reconsider their more conservative valuations, but also to be prepared to put their money where their mouth is in terms of deploying funds at pace.
Sunil Samani
Associate Director
I think UK M&A activity in 2026 will remain robust, supported by a decrease in interest rates and an acceleration in mid-market activity, with buy-and-build strategies continuing to underpin deal flow. Technology and tech-enabled transactions will remain a key deal driver, particularly where there’s clear AI exposure, while financial and professional services are also likely to see sustained momentum. Lower interest rates and easing financing costs should hopefully provide some support to valuations, helping offset the broader macroeconomic uncertainty around inflation and geopolitics, which should in turn keep the defence sector active.
Ivo Brett
Associate
I’m expecting to see the sustained interest of US private equity in the UK market, with increasing participation in lower cheque size deals and bypassing what has been a traditional route of one to two stints of UK PE before a large US exit. This is going to seriously increase competitiveness on premium businesses with attractive models and could significantly bump up valuations, but I think we’ll see limited compromise from the big players on their investment criteria for lower quality businesses.
Sophie Lomas
Manager
I think deals will continue to move at a steady, deliberate pace rather than erupt in a sudden wave, helped by the absence of new tax hikes. I expect activity to cluster around sectors supercharged by government incentives, such as technology, life sciences, and cash‑rich, resilient businesses. There’s a backlog of delayed 2025 exits, and intensifying pressure on private equity to return capital will fuel a rise in portfolio sales.
The boldest and most ambitious players will be the ones propelling the market forward and driving the next wave of activity as firms recalibrate their portfolios in a tech‑driven landscape flush with capital. Those who act with clarity and conviction will define the next chapter of M&A.
Cannelle Ramas
Analyst
This year, I see UK mid-market M&A regaining momentum. As valuations begin to stabilise, UK corporates and private equity investors are returning to the market with greater confidence, releasing transactions that had been on hold. Private equity dry powder remains elevated, with funds under pressure to deploy capital into high-quality UK assets, and activity is likely to be particularly strong in sectors such as education, defence, renewables, software and healthcare, which continue to attract both domestic and international buyers (notably from the US) and are sustaining healthy deal pipelines.
Joe Sharp
Associate Director
I think the private equity trend towards buy and build platforms (both here and in the US) will continue to provide exit opportunities for strong and stable, owner managed businesses. With the vast majority of our 2025 deals going to PE-backed platforms I expect this to continue, with increased hold periods over recent years coming to a head to boost overall deal activity.
Felix Neate
Associate Director
There was a lot of excited rhetoric about the M&A landscape rebounding in 2025 but ultimately the market demonstrated ennui. 2026 will be another year of hurry-up-and-wait, with deal volumes and valuations plodding along undisturbed. Overall, we’re unlikely to see a dramatic rebound in the Scottish ship-building, or drilling industries driven by global events but similarly the correction will not come for the US Ascendant Imperium.
