There is optimism in the deals market; confidence among privately owned businesses is up, private equity is sitting on record levels of capital still waiting to be deployed, and a growing number of owners are actively exploring a sale or an investment. KPMG's most recent Private Enterprise Barometer found over 90% of London and South East businesses confident in their prospects, with a third actively looking at M&A and 44% open to opportunities if the right one came along.
However despite this optimism, buyers and investors are proceeding with increased caution and being more selective on targets and whether to proceed to completion.
Shoosmiths' mid-year private equity update, published in July, captures this well. UK PE deal activity is down around 12% year-on-year, yet the UK remains Europe's largest private equity market by deal value and is proving more resilient than most of its peers. Capital has not disappeared; it has become more discriminating about where it goes. The same report notes that bolt-on acquisitions now make up over 71% of all buyouts, a decade high, as sponsors increasingly choose to grow existing platforms rather than back new ones from scratch. Buyers still have appetite, however they are taking longer to decide and looking harder before they commit.
That shift shows up most clearly in due diligence. Risk evaluation and management has become a key area of focus; buyers want to be absolutely sure of what they are purchasing, and deal teams are trying to run faster while going deeper at the same time. That combination, speed and depth together, is what makes today's environment feel different from previous cycles. A slow, cautious market is one thing. A fast-moving market that still insists on thorough scrutiny is another, and it leaves far less room to fix problems as you go.
We see the same pattern in our own conversations with owners and with the private equity and corporate teams on the other side of the table. Diligence today goes well beyond what might have been the traditional norms. It probes the quality and consistency of financial information over time, the strength of management information and reporting, the state of key contracts, IP and HR matters and increasingly the technology and data foundations underneath the business. None of this is designed to catch businesses out, rather it reflects a straightforward reality: buyers are now being more selective about which opportunities they pursue at all, and once they do commit to a process, they want a high degree of confidence before they complete.
The practical implication for owner-managed businesses is that the work of preparing for a transaction has to start much earlier than was traditionally the case. Value is largely won or lost before a formal process ever begins. A clean set of accounts and a credible growth story are necessary, but they are no longer sufficient on their own. What buyers are really assessing is whether the business can withstand sustained scrutiny without surprises emerging along the way, because every surprise costs time, leverage, or price.
This is where exit readiness earns its place as a distinct piece of work, rather than something to think about once an approach has already landed. It means testing your own numbers and narrative with the same rigour a buyer eventually will: is the management information robust enough to support the valuation being discussed? Are contracts, tax positions and compliance matters in the shape they need to be? Is there a clear, evidenced account of where growth is coming from next? Businesses that have done this work tend to move through a process with far fewer knock-backs, less disruption to day-to-day operations and a stronger negotiating position throughout, simply because there is less for a buyer to probe and find wanting.
On the other side of the table, buyers running their own bolt-on strategies are increasingly finding that the quality of a target's underlying financial data determines how quickly and confidently a deal can progress. Where that data is disorganised or inconsistent, even a strategically sound acquisition can stall in diligence, adding cost and uncertainty for everyone involved. Getting that groundwork right before a process starts is a smaller task than a full exit preparation exercise, but it sits on the same spectrum: the more thought that goes in before diligence begins, the smoother it tends to go once it does.
None of this is cause for alarm. It is just an acknowledgment of the reality of a more disciplined market. The businesses that will do well in 2026 are unlikely to be the ones that move fastest to market. They are more likely to be the ones that use time wisely before going to market.