M&A in the UK IT services sector: Q2 2026
UK deal activity continues its upward trend, despite wider geopolitical concerns
173
deals completed
+13%
Moore Kingston Smith
IT Services Index
67%
deals backed by PE
Our view of the market
After a strong start to the year for M&A in the UK IT services sector, we had expected we might see a cooling of the market in the second quarter, as a result of investor sentiment being affected by conflict in the Middle East and concerns over its potential impact on both the global and UK economies. While M&A activity moderated across many UK sectors during Q2, the IT services market continued to gain momentum with deal volumes increasing quarter-on-quarter. We recorded a total of 173 deals in Q2, which is a 5% increase on the 164 transactions we recorded in Q1.This resilience reflects the ongoing importance of technology investment for businesses navigating digital transformation, AI adoption, cloud migration and cybersecurity challenges. For many acquirers, these capabilities are viewed as strategic necessities rather than discretionary spending, helping to sustain demand for high-quality IT services assets even during a period of wider economic uncertainty.
The increase in IT services deal activity during Q2, despite a softer wider M&A market, underlines the extent to which buyers continue to prioritise access to specialist technology capabilities and digital transformation expertise. In addition, UK technology companies often offer attractive valuations compared with comparable businesses in the US, providing acquirers with the opportunity to purchase high-quality assets at more compelling entry points
Quarterly deal volume
“The UK IT services market has remained remarkably resilient, with buyers continuing to pursue acquisitions that add specialist capabilities in areas such as AI, cloud and cybersecurity. In many cases, acquiring expertise has become faster and more attractive than building it organically.”
Nick Thompson, Corporate Finance Partner
Spotlight on: IT consulting
IT consulting deals made up 70% of all the Q2 transactions we recorded in the IT services space. IT consulting encompasses a broad range of advisory and implementation services that help organisations plan, deliver and optimise their technology strategies. Services typically include digital transformation, cloud migration, cybersecurity, data and AI, enterprise software implementation and testing, and IT infrastructure modernisation. As technology has become increasingly central to business performance, demand for specialist consulting expertise has continued to grow, with organisations seeking external support to improve efficiency, reduce costs and adopt new technologies.This combination of strong demand and specialist expertise has made IT consulting businesses increasingly attractive acquisition targets. Many operate with high levels of recurring client engagement, long-term customer relationships and highly skilled workforces, providing a solid platform for sustainable growth. Acquirers are also attracted by the opportunity to broaden their own service offerings, deepen technical capabilities and gain exposure to fast-growing areas such as AI, cloud services and cybersecurity. As businesses continue to invest in digital transformation, IT consulting is expected to remain one of the most active areas of M&A across the wider IT services market.
We saw a number of acquirers continuing to pursue their buy-and-build strategies in the UK IT consulting market in Q2. The most prolific was Infoshare+, which completed no fewer than four acquisitions in the quarter.
Infoshare, a govtech data platform for the UK public sector, was acquired in November 2024 by PE house Omni Partners. Following the buyout, Infoshare rebranded as Infoshare+, and began to execute an aggressive roll-up strategy, which continued into Q2 2026. In April, it acquired Barbour Logic to enhance its public sector communications capabilities; in June it bought DEF Software, adding applications for planning, building control and highways; and later that month it acquired 3C Consultants and Infoboss to strengthen its housing and asset management vertical.
In April, Moore Kingston Smith advised the UK’s largest pure-play quality assurance business, 2i, backed by PE firm Rockpool, on its acquisition of Planit Software Testing, which helps organisations to deliver high-quality software through specialist expertise, scalable solutions and consultancy services. This marks the second strategic acquisition for 2i since Rockpool came on board, and follows its acquisition last year of nFocus Testing which Moore Kingston Smith also advised on.
Q2 deals by sector
Trending: Network and connectivity services
Network and connectivity services deals accounted for 19% of all the Q2 transactions we recorded in the outsourcing and distribution space, making this the second most popular category with acquirers after IT managed services, up from fourth place in Q1.
Network and connectivity service providers are benefiting from sustained demand for secure, resilient and high-performance digital infrastructure as organisations continue to invest in cloud computing, hybrid working, cybersecurity and AI-enabled technologies. As businesses become increasingly reliant on data-intensive applications and always-on connectivity, robust network infrastructure has become business-critical rather than simply an operational requirement.
The growing convergence of connectivity, cloud, managed services and cybersecurity is also driving acquisition activity, as buyers seek to build broader end-to-end technology offerings that can support clients across their entire digital infrastructure.
In April, alternative gigabit broadband operators Truespeed Communications and Freedom Fibre announced they had merged to create the newly formed Freedom Truespeed Group. Backed by investors including Aviva Investors, InfraBridge and Equitix, the combined entity brings together two complementary networks to form a scaled, capital-efficient full-fibre platform. We expect to see further consolidation within the UK alternative network sector as operators seek greater scale in what remains a fragmented market.
Matt McRae, Corporate Finance Director
Private equity
Of the 173 UK IT services transactions we recorded in Q2, 67% involved private equity (PE) investment, either directly or via an existing portfolio company. While this still accounts for two-thirds of the market, it is only a small increase on the 66% we reported last quarter and remains significantly lower than the levels we saw throughout last year.
The UK PE market was boosted by a series of interest rate cuts in 2025, and activity at the end of last year was underpinned by anticipated further cuts in 2026. However, the outbreak of war in the Middle East reduced expectations of further rate cuts in the short-term. As a result, PE houses, particularly those reliant on leverage, appear to have slightly reduced their activity in the first half of the year. If we have seen the end of the conflict in the Middle East, this should help improve investor confidence. However, while uncertainty exists regarding the fragility of the truce, and economic conditions remain mixed, financing conditions will continue to present challenges for some transactions.
In Q2, LDC announced two new investments into the IT services space. In April it announced a significant investment into London and Cheltenham-based Daintta, a professional services firm delivering technology into secure environments. And in June it revealed a new platform deal, saying it had invested in London-headquartered UBDS Group, an enterprise digital lifecycle and cybersecurity consultancy, as it pursues an ambitious growth by acquisition strategy.
Percentage of PE-backed deals
Notable UK mid-market deals
In April, eBay announced the acquisition of Eladene Systems, a UK-based software platform for vehicle dismantlers that offers a cloud-based dismantling yard management system and parts listing platform. Eladene’s tools for inventory management, warehouse operations, and parts listings will streamline how yards digitise stock and sell recycled parts. The acquisition is expected to enhance eBay’s recycled parts and accessories offering for buyers and sellers, improving efficiency, accuracy, and market coverage across the UK.
In April, VertiGIS, a provider of geospatial solutions for utilities, governments and commercial enterprises, completed the acquisition of AIM-listed 1Spatial, a provider of location master data management software, in an all-cash deal worth £87 million. VertiGIS is backed by technology-focused investment house Battery Ventures.
Also in April, ClearCourse, a London-based software and embedded payments group backed by Aquiline Capital Partners, acquired Kurve, a self-service point of sale technology provider and owner of the pointOne EPOS brand.
Stock market performance
After a difficult and volatile Q1, as global investors reacted to military action in the Middle East, Q2 ended with a much better outlook on geopolitical events, and markets rose as a consequence. Having ended Q1 5% down, the S&P 500 experienced a significant return to its bull run, ending the quarter up 14%.
The Moore Kingston Smith IT Services Index finished Q2 up by 13%, almost matching the general market, and well ahead of one of our two technology-specific indices, the FTSE TechMark Focus index, which ended 8% up, but trailing the MSCI World Information Technology index, which ended Q2 up an impressive 32%. Of the 19 companies in the Moore Kingston Smith IT Services Index, more than half ended the quarter in negative territory, but a couple of companies saw their share prices more than double, with these gains more than outweighing the losses and lifting the index overall.
Our worst performer in the last two quarters, Xerox, was our top performer in Q2, seeing a 148% increase in its share price during the period. The share price began to rally when the company reported strong first-quarter financial results that significantly beat analyst expectations, driven by its recent acquisition of Lexmark. Adding to the upward momentum, a high level of short interest in the stock, reported to be over 28% of the available shares, contributed to the sharp price increase as investors who had bet against the stock were forced to buy shares to cover their positions. However, despite this significant increase in the value of Xerox stock, it should be noted that its share price, trading at around $3 at the end of June, is still only around half the level that it was a year ago.
Our worst performer in Q2 was Intuit, which saw its share price fall by 39% during the period. Intuit has been one of the worst performers in the S&P 500 this year, and had already experienced a 31% decline in its share price in Q1. In June it was hit by a downgrade from Goldman Sachs, citing concerns with the company’s TurboTax software, which represents roughly 25% of the company’s revenue and operating income, and concerns that as a new generation of AI-powered tax services become increasingly competitive with the potential to take market share from Intuit and put pressure on pricing.
Moore Kingston Smith IT Services Index
Q2 2026 sector subcategories
Outlook
Looking ahead, we expect the fundamental drivers of M&A activity in the UK IT services sector to remain firmly in place. Demand for expertise in AI, cloud, cybersecurity and digital transformation continues to grow, while ongoing skills shortages mean acquisition remains an attractive route for businesses seeking to strengthen their capabilities. Financial sponsors also continue to hold significant levels of uninvested capital, and strategic acquirers remain focused on technology-enabled growth, supporting a healthy pipeline of potential transactions.While geopolitical developments, inflationary pressures and broader macroeconomic uncertainty may continue to influence the timing of individual deals, the sector has demonstrated a continued resilience in the face of external headwinds. As long as technology investment remains a strategic priority for organisations, we expect high-quality IT services businesses to continue attracting strong interest from both domestic and international buyers. Although deal activity may fluctuate from quarter to quarter, the medium-term outlook for M&A in the sector remains positive.
“The market has demonstrated that demand for high-quality IT services businesses extends well beyond the economic cycle. As organisations continue to invest in technology-led transformation, we expect well-positioned businesses to remain highly sought after by both strategic and financial buyers.”
Nick Thompson, Corporate Finance Partner
Thinking about your next move? Looking for up-to-date insight into the value of your business?
Arrange a free, confidential valuation consultation with one of our IT Services M&A specialists to understand current market conditions, valuation drivers and the options available to you.
Book your free valuation consultation here.
Contact us
Methodology
In compiling our deal tracker we use Pitchbook, an international financial data provider that gives access to comprehensive data on the private and public markets. We analyse every deal with either a UK buyer or UK seller or both. Where the target company is classified as IT consulting, outsourcing and distribution, or data and security, the transaction is entered into the deal tracker.
