UK Software M&A Steadies as Buyers Turn Selective

UK software M&A activity has picked up through the first half of 2026, following a broader lower mid-market slowdown in 2025 in which UK target transactions fell 19% year on year, from 6,757 to 5,466.

IT consulting, spanning cloud migration, cybersecurity, data, AI and enterprise software implementation, accounted for 70% of completed UK IT services deals in the second quarter of 2026, with network and connectivity services climbing to become the second most active category.

Sub-sectors including cybersecurity, data and AI infrastructure, and vertical software for regulated industries such as financial services, healthcare and manufacturing continue to attract both strategic acquirers and private equity investors.

Buyer appetite has held up, but the process has sharpened. Private equity was involved in 67% of UK IT services deals in the second quarter of 2026, still the dominant buyer type, though its share sits below the highs of 2025 as underwriting standards tighten.

Acquisitions are increasingly curated and targeted rather than run as broad auctions, and buyers are applying a stricter AI resilience filter, testing how well a target's technology and roadmap withstand integration and automation scrutiny. Consolidation continues in fragmented, specialist areas of the market, particularly vertical software serving manufacturing, logistics and regulated sectors, where buy-and-build platforms are adding capability and geographic reach.

Valuation outcomes in the sector vary considerably by niche and buyer type. The strongest pricing is going to software with defensible, hard-to-replace positioning, particularly where it sits in a regulated, compliance-led or public sector-facing niche, achieving low double-digit EBITDA multiples.

More commoditised or broad-market software has traded at low to mid single-digit multiples over the same period. The premium is earned by embedded functionality and revenue visibility, not by SaaS status alone.

Some deal highlights within the last 12 months:

• Kivue Limited acquired by Eleco PLC with a 11.50x EBITDA multiple
• Digitalk Group acquired by Hansen Technologies with a 10.00x EBITDA multiple
• Captify Technologies acquired by Verve Group with a 5.12x EBITDA multiple
• Goss Technology Group acquired by AdvancedAdvT with a 8.55x EBITDA multiple
• HFX Limited acquired by AdvancedAdvT Limited with a 4.30x EBITDA multiple
• Trojan Consultants acquired by Idox plc with a 12.64x EBITDA multiple

UK IT and software services recorded 173 completed deals in the second quarter of 2026, up 5% on the 164 recorded in the first quarter, despite wider market caution during the period. Private equity buyers accounted for the majority of that activity, split between direct acquisitions and portfolio bolt-ons, alongside continued strategic buying from trade acquirers.

Buyers are weighing earnings quality, customer concentration and the durability of recurring revenue closely, and treating AI capability, or the lack of it, as a specific point of due diligence rather than a general talking point.

As we move through 2026, many software business owners are reviewing their strategic options. For those considering a transaction in the next 12 to 24 months, early preparation remains critical. This includes evidencing genuine recurring revenue and customer retention rather than headline ARR, tightening reporting on margins and cash generation, reducing key-person and technical dependency risk, and being able to set out the business's AI roadmap and resilience credibly for a buyer's technical due diligence.

At La Salle Corporate, we are actively engaged with buyers and investors across the UK software sector. We support owners in preparing for sale, sharpening the value drivers buyers now scrutinise most closely, and navigating transactions to achieve successful outcomes in the lower mid-market.



If you would like to explore current buyer appetite, valuation benchmarks or preparation for a future transaction, we would be happy to discuss your options with you.

Reach out today to arrange an informal, confidential call.