UK Trends and Developments Contributed by: Ronnie Preiskel, Karthyaeni Vittala and Daniel Preiskel, Preiskel & Co
With an optimistic eye on the future, PE firms may rush to deploy their dry powder and diversify portfolios, before any potential regulations begin to show teeth. Economic situation in the UK The recent change of government and the Autumn Budget, not least the increased labour cost, will undoubtedly negatively impact on many services businesses, notwithstanding the global impact of US elections and global conflicts. Despite this, global TMT deal kickoffs have jumped 15% in the last six months, prompted by the gen- erative AI hype, steadying inflation rates and pent-up supply and demand, according to virtual data room provider Datasite, which claims to have seen a 12% uptick in TMT deals year on year. The UK ranks 4th in the top five regions by total sell-side kickoffs between July 2023 and August 2024, behind only the US (West and South) and Germany. Datasite records that, on average, the EMEA region saw an increase of 10% in potential sellers in 2024, with average deal closure down by 1% generally and down 11% in relation to mid-market deal closes, which is likely to be a sign that investors are “kicking the can down the road” until they begin to see evi- dence of more favourable market conditions. Stability will always be key to the open market, and not least in M&A transactions. Looking forward, many investors, PE houses and cor- porates that made acquisitions at the height of the cycle in 2021 will be looking for a return on investment and liquidity moving into 2026, having seen out their fourth financial year. In turn, some may look at the improving M&A market for secondary sales, bolt-on acquisitions and divesture as they look to consolidate. There is hope that the mounting pressure on PE funds to deploy their “dry powder” will spark the next bull run for M&A markets. Emerging technology trends The TMT sector is driven by continuous developments in new technologies, with the next key developments expected to include the emergence of Agentic AI, the continued development and deployment of autono-
mous vehicles, and progress in the field of quantum computing. Agentic AI involves artificial intelligence systems designed to operate autonomously with limited super- vision. Its machine learning models allow it to mimic human decision making. This builds on generative AI technologies (often using generative AI as a tool) to make plans and decisions, and to take actions. Users can still interact with Agentic AI via natural language prompts such as a customer service chatbot, or the system may be automated to run in the background such as automated personal assistants. Autonomous vehicles already operate as ride-hailing systems in cities such as Los Angeles, Phoenix and San Francisco in the USA. The integration of advanced sensors and connectivity is addressing safety con- cerns and improving efficiency. Expansions of autono- mous vehicles into B2B solutions are also opening new opportunities in the industry. Quantum computing utilises quantum mechanics to solve complex problems beyond the capabilities of ordinary computers. Unlike ordinary computers, which operate through binary, quantum computers utilise qubits capable of computing multiple things at once. This creates potential for greater cybersecurity, AI systems, and research and design for manufacturing. Mainstream adoption is likely still some years away, but continued technological and research advance- ments present commercial opportunities for various stakeholders. Notably, most emerging technologies (excluding quantum computing) are seeing increased usage across consumers, businesses and governments. As such, there is likely to be significant growth throughout this space. Industry M&A outlook for 2026 Over the next year, dealmakers will continue to be presented with industry-based and macroeconomic challenges, but there are some positive signs. TMT businesses are particularly attractive targets for deals, and stand out in a predicted wave of deal-making.
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