Not all sectors are equal in the current M&A environment. The data from Dealsuite, MarktoMarket, PwC, and BCG converges on a clear picture of where activity is concentrated, but more importantly, where within sectors buyers are actually deploying capital.

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Across the UK lower and mid-market, the pattern is consistent: niche, scalable, and defensible businesses are commanding the strongest demand.

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Technology & Software: The Premium Tier

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Software Development (8.2x EBITDA) and IT Services (7.8x) sit at the top of the UK valuation table and are expected to remain there in 2026. But the premium is not evenly distributed, it is concentrated in specific high-value niches.

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The most active areas include vertical SaaS (particularly in finance, healthcare, and compliance), cybersecurity services, cloud and managed service providers (MSPs), and data/AI-enabled platforms. Businesses that combine recurring revenue with deep integration into customer workflows continue to attract the strongest buyer interest.

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Recent lower and mid-market deal activity reflects this:

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• Descartes Systems’ £2.6m acquisition of Utordo (trading as OrderMine), a London-based developer of AI-driven inventory management and demand planning software for e-commerce retailers, a classic SME vertical SaaS bolt-on.

• Eleco’s £2.3m acquisition of Kivue, a Reading-based developer of project portfolio management software with £1.5m revenue, an 11.5x EBITDA deal highlighting the premium buyers pay for niche compliance and governance SaaS targeting professional services SMEs.

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The direction of travel is clear: buyers are assembling capability-led platforms, not just acquiring standalone businesses.

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Business Services: The Volume Leader

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Business Services is expected to see the largest increase in transaction volume in H1 2026 across all European regions tracked by Dealsuite, a reflection of sustained buy-and-build activity in the lower mid-market.

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The most active niches include accountancy and compliance, HR and payroll outsourcing, specialist consulting, digital marketing services, and testing/inspection/certification (TIC). Across these areas, fragmented markets provide ideal conditions for consolidation.

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Valuations (6.0x EBITDA UK&I average) are supported by recurring revenue, client stickiness, and niche positioning.

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Recent deal activity highlights this trend:

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• Croma Security Solutions’ £492k acquisition of Southern Security Services, a Poole-based SME providing CCTV, intruder alarms, and access control to commercial clients since 1983, a micro-cap bolt-on at 3.8x EBITDA, representative of the repeatable sub-£1m deals consolidating the fragmented SME security market.

• Apleona’s £18m acquisition of Morrison Facilities Services, a Livingston-based provider of technical and integrated FM services across Scotland and southern England, primarily serving public-sector clients including schools, universities, and healthcare facilities, a cross-border deal into a specialist SME with contracted public-sector revenue and strong geographic focus.

• Galliford Try’s £9.7m acquisition of Nene Valley Fire & Acoustics, a Wellingborough-based SME founded in 1986 installing and maintaining passive fire protection systems, fire doors, fire barriers, acoustic works, and thermal insulation, a bolt-on into a specialist compliance subcontractor with regulatory tailwinds from post-Grenfell building safety reform.

• Certania’s £30.5m acquisition of ICA Group, a Rotherham-based multi-disciplinary compliance and quality consultancy to the construction sector with £21.4m revenue, a 10x EBITDA deal for an SME consolidator in its own right, operating across building control, gas and electrical audit, fire safety, and clerk of works services through five specialist subsidiaries.

• Duroc’s £9.8m acquisition of Optyma Security Solutions, a Bexleyheath-based SME founded in 1987 specialising in access control, CCTV, and intruder alarm systems for the railway and critical infrastructure sectors, an international buyer acquiring a niche operator with long-term contracted revenues in a highly regulated end-market.

• Croma Security Solutions’ £257k acquisition of TLS Security Systems, a Taunton-based SME providing locksmith, access control, and CCTV services since 1991, an ultra-small deal at 2.3x EBITDA, showing that regional SME service businesses with loyal local client bases remain highly acquirable at modest valuations.

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In this sector, scale is being built through repeatable acquisition strategies focused on niche service lines.

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Healthcare & Life Sciences: Strategic Priority

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Healthcare and pharmaceuticals command a 7.5x average multiple in the UK mid-market, but much of the real activity is happening below that level, through targeted acquisitions of specialist providers and service platforms.

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The most attractive niches include diagnostics, mental health services, elderly care, outsourced pharma services, and technology-enabled care delivery. Buyers are particularly focused on businesses with contracted revenue, regulatory barriers, and strong demand visibility.

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Lower and mid-market deals illustrate this clearly:

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• TriNetX’s £1.38m acquisition of Zetta Genomics, a Cambridge-based health tech SME founded in 2018 whose XetaBase platform provides genomic analysis and large-data research tools, a small-ticket deal signalling how specialist health technology businesses with proprietary data platforms are attracting international strategic buyers regardless of early-stage scale.

• Vulcan Two Group’s £3.6m acquisition of Hyperdrug Pharmaceuticals, a Barnard Castle-based online pharmacy founded in 1828 providing veterinary and human medicines with £9.1m revenue, a 7.2x EBITDA deal showing how long-established SME healthcare operators with digital channels and own-brand products remain attractive consolidation targets.

• BGF’s £15m investment in Seda Pharma Development Services, a Cheadle-based contract research and manufacturing organisation (CRDMO) founded in 2015 specialising in complex medicines and paediatric drug development, a growth capital deal into a specialist SME with high regulatory barriers, illustrating that buyers are targeting capability-led businesses with long-term contracted demand.

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Across the sector, buyers are executing platform expansion strategies, with bolt-ons playing a critical role in scaling capability and geographic reach.

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Industrial & Manufacturing: Quietly Active

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Industrial & Manufacturing is expected to be the second most active sector for deal volume growth in H1 2026. While the average multiple (5.4x UK mid-market) appears modest, it masks strong demand for high-quality, niche operators.

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The most active areas include precision engineering, aerospace and defence supply chains, specialist manufacturing, automation, and businesses with proprietary processes or certifications.

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Buyers in this sector are highly selective, prioritising order book visibility, technical capability, and exposure to resilient end markets.

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Recent lower and mid-market transactions demonstrate this:

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• AMCOMRI Group’s acquisition of Enerveo’s National Compliance & Testing division, a Fareham-based specialist electrical test and compliance operation supporting private network electrical infrastructure markets across the UK, a targeted capability acquisition into a niche, regulation-driven SME service line with national reach and recurring inspection revenues.

• Light Science Technologies’ £4.8m acquisition of RLUK Injection (trading as Injectaclad), a Cardiff-based SME founded in 2020 producing a specialist acrylic-graphite sealant for fire cavity barriers in buildings, a 9x EBITDA deal for a young business with proprietary technology addressing post-Grenfell regulatory demand, illustrating how technical differentiation accelerates valuations even at sub-£5m deal size.

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The key takeaway is that while the sector is less visible, it remains consistently active for the right assets.

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Sectors to Watch with Caution

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Retail Trade (3.4x), Hospitality & Tourism (4.2x), and Construction & Engineering (3.9x) are all expected to see declining transaction volumes in H1 2026. However, deal activity has not disappeared, it has become more selective and niche-driven.

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In Retail, buyers are focusing on digitally native brands and premium positioning:

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• THG acquiring and scaling online-first consumer brands within its platform.

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In Hospitality & Leisure, activity is concentrated in scalable concepts and strong branded formats:

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• Loungers plc expanding through selective site acquisitions and rollouts.

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In Construction & Engineering, resilience is found in infrastructure, energy, and specialist subcontracting niches:

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• Keltbray growing through acquisitions aligned with infrastructure and energy transition projects.

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Across these sectors, buyers remain active, but they are more disciplined on valuation and far more selective on quality.

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Our Strategic Review service involves a deep-dive of transactions in your sector niche to create a comparable data set of multiples and value drives from which to build your value creation and exit plan.

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