As the UK business brokerage community se les into 2026, the volatility that plagued previous years has given way to a cautious equilibrium. New data released this month reveals a distinct “two-speed” market emerging across the United Kingdom and Ireland, characterised by a widening valuation gap between high-growth sectors and traditional “Main Street” enterprises. 

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The Valuation Divide 

According to the latest figures from the Dealsuite M&A Monitor, the average EBITDA multiple in the UK and Ireland mid-market currently stands at 5.3x, a slight dip from late 2024. However, this headline figure masks a significant divergence at the sector level. 

Brokers are currently navigating a landscape where technology-led industries are trading at substantial premiums. Software development companies are commanding median multiples of 8.2x EBITDA, with healthcare and IT services following closely at 7.6x. Conversely, asset-heavy and cyclical sectors are facing valuation ceilings; retail trade and construction continue to see valuations constrained below 4x, driven by margin volatility and cyclical pressures. 

The Small Firm “Penalty” 

For business brokers handling smaller transactions, size remains the single most influential factor in valuation discussions. Data indicates a punishing “small firm premium” in the current market. A UK business generating £200,000 in EBITDA is currently achieving an average multiple of just 3.1x, whereas a firm generating £10 million commands an average of 8.5x. 

This disparity highlights the risk inherent in smaller enterprises, particularly regarding key-person dependence and customer concentration, which continues to drive investors toward larger, more resilient assets. 

Private Equity Resurgence 

Despite the valuation compression in some sectors, deal volume is surging. The UK and Ireland led European growth in 2024 with a 23% increase in deal activity, a trend that has carried momentum into early 2026. 

This resurgence is partly driven by a wave of “take-private” deals. Following a record number of de-listings from the London Stock Exchange, Private Equity (PE) firms have capitalised on undervalued public companies, leveraging record levels of dry powder to secure high-quality assets. For the broader brokerage market, this activity signals a return of liquidity, with exit activity in the region recovering by approximately 34% year-on-year. 

Tech-Enabled Brokerage 

To bridge the gap between seller expectations and buyer scrutiny, UK brokerages are increasingly turning to technology. With the bid-ask spread remaining a hurdle, AI-powered valuation models are being deployed to provide real-time, data-driven pricing strategies that justify asking prices to sceptical buyers. 

Furthermore, as due diligence becomes more rigorous due to stricter lending requirements, brokers are utilising AI tools to automate document review and compliance checks, significantly accelerating transaction timelines that had stalled in previous years. 

Outlook for 2026 

Looking ahead, the market is bracing for a significant initiative set to launch in April 2026: the UK Retail Investment Campaign. Backed by 20 leading financial firms and the HM Treasury, this campaign aims to shift the British public’s mindset from cash savings to long-term investing. For business brokers, this cultural shift could eventually unlock new pools of capital for lower-middle-market investments. 

While the “Silver Tsunami” of retiring owners continues to fuel supply, the clear message for 2026 is that preparation is paramount. In a market rewarding scale and resilience, business owners must demonstrate robust operational independence to command premium valuations. 

London, 26 January 2026