UK Technology Hardware M&A, Order Books Drive Value

Deal activity across UK technology hardware and equipment has held up well over the past 12 months. Three things have pulled it through: defence and security procurement, industrial automation, and the rising electronics content in energy, transport and infrastructure programmes.

Buyer interest runs right across the sector. Contract electronics manufacturing, sensors and instrumentation, test and measurement, connectivity and RF hardware, detection and security systems and defence electronics are all drawing strategic acquirers and private equity.

What buyers want in hardware differs from the software playbook. The premium goes to businesses that own their designs and hold approvals a competitor cannot quickly replicate. It also goes to those with a visible order book, or a long-life installed base generating aftermarket, service and spares income.

Defence and security exposure has been the clearest draw.

ADS Group's first estimates for 2025 put UK defence turnover at 36.5 billion pounds, 66 per cent higher than a decade earlier. The security and resilience sector reached 27.6 billion pounds, up 168 per cent over the same period. That growth has pulled acquirers towards the businesses supplying it.

Listed industrial groups have led much of the activity, building out sensing, detection and instrumentation portfolios. Private equity has backed platforms in fragmented areas such as contract manufacturing and specialist test services, using buy-and-build to add capability and customer access.

Valuation outcomes track earnings quality closely here. Well-run technology hardware businesses are achieving high single-digit EBITDA multiples. Double digits are within reach, but the conditions are specific: defence or mission-critical exposure, contracted or programme-backed revenue, gross margins protected by proprietary design or hard-won approvals, and meaningful aftermarket income.

Buyers are discriminating rather than paying up across the board. The gap between a well-prepared business and an average one is wider than any headline range suggests.

Some deal highlights for 2025 were:

• Don Electronics acquired by Braime Group PLC with a 6.55x EBITDA multiple
• Nortech acquired by Vestum AB with a 7.00x EBITDA multiple
• Severn Thermal Solutions acquired by SDI Group PLC with a 8.42x EBITDA multiple
• Crime and Fire Defence Systems acquired by Journeo plc with a 8.59x EBITDA multiple
• Covelya Group acquired by Kraken Robotics with a 9.69x EBITDA multiple

Over the last 12 months, transaction volume has come from a mix of strategic acquisitions and private equity investment. Platform deals in sensing, detection and specialist manufacturing have been followed by bolt-ons.

Buyers are looking hard at the things specific to hardware: component sourcing and single-source risk, inventory levels and obsolescence provisions, and tariff exposure on imported parts and finished goods. They also want to see whether gross margin holds up by product line rather than only in aggregate.

One point specific to this sector is worth planning for. A large share of UK hardware transactions now falls within the National Security and Investment Act regime. The Cabinet Office's latest annual report covers April 2025 to March 2026 and records 1,324 notifications. Defence accounted for 58 per cent of mandatory notifications and military and dual use for 23 per cent. That tells you where transaction activity in this sector is concentrated. Almost 96 per cent were cleared without call-in. For most owners this is a timetable issue rather than a barrier, but it needs identifying early and building into the process.

As we move through 2026, many technology hardware and equipment business owners are reviewing their strategic options. For those considering a transaction in the next 12 to 24 months, early preparation makes a material difference.

In this sector that usually means confirming ownership of IP, design files and tooling, and classifying products for export control. It also means evidencing the split between one-off equipment sales and recurring aftermarket income, tidying up inventory accounting and obsolescence policy, and showing gross margin by product line and by customer.

At La Salle Corporate, we are actively engaged with buyers and investors across the UK Financial Services sector. We support owners in preparing for sale, enhancing value drivers and navigating transactions to deliver optimal outcomes in the lower mid-market.

We previously advised the shareholders of Elite Electronic Systems on the sale of a majority stake to Lonsdale Capital Partners. Elite is a specialist contract electronics manufacturer serving medical, secure communications and wearable technology markets.

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.