Challenges remain as businesses weigh up M & A next move

The honest answer is it’s too early to know whether M & A activity will increase in the region in 2026, writes John Gethen, Deal Advisory Director - M&A, BDO, East Anglia.

After all, the economic headwinds are still blowing strongly, with business costs remaining high and confidence remaining low.

Yes, deal pipelines look healthy and, with more certainty following the Autumn Budget, there is a window of opportunity for businesses to plan and prepare for what’s ahead. But will that translate into deals? The good news is, businesses recognise the part M & A can play in achieving growth ambitions.

This is particularly so for those sectors where organic growth is hard to come by, and bolt-on acquisitions provide a means for boosting profit margins and building critical mass to strengthen their financial foundations in 2026.

This motivation is mirrored in our latest bi-monthly Economic Engine survey of 500 mid-market businesses. Nearly one in five East of England businesses (19 per cent) expect their growth this year to come from M & A, supported by productivity improvements and incorporating technologies like AI, as well entering new international markets and growth from existing customers.

When it comes to scaling up, funding is most likely to come from existing shareholders (33 per cent), perhaps indicating a more cautious approach, with the same number of regional businesses also looking at government grants and incentives to fund their growth ambitions.

While only 17 per cent earmarked private equity and venture capital as a source of investment, there’s no doubt that PE and VC funds will play a role in accelerating strategic growth in 2026 and, for some, helping them realise their exit plans.

Private equity, in particular, is an important driver of M & A activity in the region, spanning a multitude of sectors, whether that’s industrials, technology, life sciences & healthcare, or financial services. While deal volumes have been tempered in the last 12 months, there is still significant capital to deploy for certain investors. The hope is this availability of capital will strengthen private equity appetite for deals as we move throughout the year.

It’s fair to say that the challenging trading environment for many East of England businesses in 2025 remains as we move through the first quarter and that experience may influence decision-making over the course of the next 12 months. For example, more than one-fifth of regional businesses admit that difficulty in accessing investment or new capital will be the biggest risk to business performance in 2026. There is clearly a job to be done in improving the conditions for growth.

Despite the ongoing pressures, East of England businesses are extremely resilient in the face of adversity and keen to move the dial when the conditions are right. This is clear to see in our pipeline – both in existing mandates and new opportunities – as well as the conversations we have with founders and leadership teams.

For business owners and entrepreneurs, opportunities still exist for those prepared to seize the initiative. As ever in M & A, timing is crucial and being well prepared for an exit is more important than ever.

So, our advice for business owners with an eye on an exit or fundraise in FY26 – take advice early and prepare well in advance.