2026 M&A outlook for the UK IT services Sector

A look back at 2025

The UK IT services sector remained resilient but uneven in 2025, as organisations moved AI from pilots to real use, tightened cybersecurity, and adopted hybrid and sovereign cloud to control costs and meet regulatory demands. Deal volumes within the IT services space were broadly in line with 2024, the majority being private equity-backed, with buyers targeting capability-led AI, cloud‑security and data‑engineering capabilities, often adding sector expertise or partnering where full acquisitions were less practical. Particular hot spots appeared in regulated and mission‑critical sectors such as financial services, healthcare, government, energy and telecoms.

Throughout this period, our international team of transactional and sector experts have guided clients through the opportunities and challenges presented. Some of our highlights this year include:

• Advising Nortal, a strategic innovation and technology company, on its acquisition of Nearsure, a US-based technology solutions provider with talent across 18 Latin American countries.
• Advising IFS, the leading provider of Industrial AI software, on its acquisition of 7bridges, an AI-powered supply chain management solution provider.
• Advising long-standing client Puma Growth Partners on various investments, including its investment into Semeris, a legal AI specialist that combines AI and human expertise to help financial institutions streamline legal document analysis and meet compliance standards, and a Series A investment round for YASO, the operating system for global brands in China.
• Advising long standing client Battery Ventures on its $165 million investment round into Signal AI, an intelligence platform that analyses billions of data points across news, regulations, litigation, social media and other sources to highlight emerging risks and reputational threats.
• Providing expert insights and advising clients on all things Artificial Intelligence, including AI and Intellectual Property, AI in M&A and the EU AI Act.

The outlook in 2026

Looking forward, the 2026 outlook for UK IT services M&A is likely to be defined by capability-led consolidation and a sharper focus on enhancing technical prowess. We expect to see buyers prioritising acquisitions that add depth in AI, data engineering and cybersecurity, and deal flow to continue to track spend in the sectors referred to above.

International expansion will remain a core strategy for some market participants, to gain access to new customers and markets and/or additional service delivery capabilities, for example in the Americas and Central and Eastern Europe to support blended cost, time‑zone coverage and access to scarce AI and data skills. Cross‑border integrations will therefore need disciplined attention to data flows, localisation and evolving EU and UK rules on interoperability and switching.

Another notable shift in this space is the rise of AI “infrastructure‑like” services. As software enterprises move from pilots to production, they are investing in proprietary data sets, model pipelines and governance that demand specialised compute, storage, security and observability. This is fuelling M&A and partnering in adjacent managed services, MLOps tools, model evaluation and safety, and in partners capable of operating within regulated environments. We expect to see competition for these assets intensifying.

Artificial Intelligence

The rapid scaling of AI has generated vast datasets and increasingly intricate training architectures, creating a clear opening for sector consolidation and for the emergence of “infrastructure‑like” providers. As these capabilities mature, businesses that combine expertise with the underlying infrastructure required to support AI adoption are likely to be priority acquisition targets.

Cyber-Security

We expect cyber security M&A to stay busy into 2026, with continuing consolidation, combining headline platform buys with active bolt‑on activity, and an ongoing shift towards larger platform plays, as buyers combine cloud, exposure management and identity capabilities to meet enterprise demand for integrated defences. 

We expect deals to be negotiated with a sharper focus on cyber risk, including deeper, more technical due diligence, fuller disclosure of past incidents and vulnerabilities, and more explicit, warranty protection around technology, data protection and intellectual property. The threat landscape is also evolving, with AI improving detection on the one hand and enabling more sophisticated attacks on the other, with which we may see buyers focussing due diligence more in this area.

Cutting through complexity

M&A activity in the IT services segment in the UK is a practical response to clients’ AI, cloud and security driven investment priorities and to UK regulatory scrutiny of cloud and data‑intensive services. As we look to 2026, we expect capability‑led consolidation to continue, supported by data privacy, and AI infrastructure themes evident in UK 2024–2025 deal data. We understand that with change comes complexity, and our goal is to help demystify the evolving regulatory landscape, providing clarity for our clients. Whether you are considering an acquisition, divestment or a strategic partnership, we are here to support you and your strategic goals.