M&A activity drops in Q2 as businesses feel full impact of Iran war
UK M&A activity took a hit in Q2, as businesses and investors felt the full impact of the Iran war. However, ongoing speculation around changes to capital gains tax (CGT) in the upcoming budget may prompt a surge of deal completions ahead of potential tax rises, 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 decreased to 353 in Q2 2026, from 407 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) however was £4.2bn in Q2 2026, up £2.4bn on the previous quarter.
The value of inward M&A (foreign companies acquiring UK companies) was £25.4bn in Q2 2026, £9.7bn more than the previous quarter and up £15.7bn on Q2 2025. The total value of outward M&A (UK companies acquiring foreign companies) in Q2 2026 was £2.7bn, £1.4bn lower than Q1 2026, but down £0.9bn on Q2 2025.
Helen Brocklebank, partner and head of M&A at RSM UK, said: “Q2’s M&A statistics captured the true impact of the Iran war which has led to a slowdown in deal activity. With business and investor confidence taking a hit and the economic outlook deteriorating, business owners took a breath before kickstarting or pursuing their sale plans.
“While there’s been a general slowdown in the deals market, completions are still happening and there remains a stable pipeline of activity. The uptick in deal value points to the flight to quality. Deals that can still drive value despite ongoing market volatility and uncertainty will be the biggest winners. There’s a significant amount of capital available for private equity to deploy and processes remain competitive for those with robust, visible revenue streams, and strong growth prospects.
“Investors are paying greater attention to the impact of AI and applying caution to companies that are particularly vulnerable to any AI-related disruption. By contrast, sectors that are more resilient to technology changes, such as industrials and business services, are gaining more attention.
“Speculation around potential changes to CGT in the Autumn Budget could prompt a sudden rush to complete deal processes, as business owners look to shield themselves from any tax rises. If changes to CGT are announced, there may also be a further run of deal completions post-Budget depending on the timings of implementation.”