M&A deals still complete in Q1 but activity to slowdown in Q2
M&A deals continued to complete in Q1, despite the outbreak of the Iran war, highlighting the resilience of buyers and sellers. But deal activity could take a further hit in Q2 unless there’s a resolution to the conflict, says leading audit, tax and consulting firm RSM UK.
Today’s ONS quarterly M&A statistics show the total combined number of cross-border and domestic M&A transactions involving a change in majority share ownership fell to 352 in Q1 2026, from 495 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) was £1.5bn in Q1 2026, a £0.4bn decrease on the previous quarter, and down on Q1 2025 (£3.1bn).
The value of inward M&A (foreign companies acquiring UK companies) was £14.2bn in Q1 2026, £18.8bn lower than the previous quarter and down £6.1bn on Q1 2025. The total value of outward M&A (UK companies acquiring foreign companies) in Q1 2026 was £4.7bn, up £1.7bn on Q4 2025, but £3.3bn lower than Q1 2025.
Helen Brocklebank, Partner and Head of M&A at RSM UK, said: “A small drop off in M&A activity was expected in Q1 after last year’s budget fuelled an uptick in transactions in Q4, but uncertainty driven by economic volatility has exacerbated that trend. It’s encouraging that deals have continued to close despite the outbreak of the Iran war, showing a relatively healthy level of resilience among buyers and sellers. However, unless there’s a resolution to the Middle East conflict soon or more certainty is created, we may see deal activity severely hit in Q2 as companies start pulling back on major decisions.
“Many buyers and sellers are now waiting to see how both geopolitical and domestic tensions unfold before making any hasty decisions. Key factors that buyers will be watching closely when considering a potential target are the extent it is impacted by rising energy costs and weak consumer confidence, as well as the resilience of their supply chains.
“An area gaining attention is the impact of AI on SaaS businesses, which is hitting multiples as investors take a more cautious approach to acquiring these companies. Instead, buyers are sticking to industries with strong recurring or regulatory driven revenues such as business and professional services, and healthcare. There’s also growing interest in aerospace and defence, particularly given the current environment.”