The economic outlook shifted abruptly in the first quarter of the year. The US-Israeli attacks on Iran and the effective closure of the Strait of Hormuz to Western shipping sent energy prices sharply higher, put expected interest rate cuts on hold and prompted downward revisions to UK GDP forecasts. For private company owners already absorbing the impact of last year's Budget, it has been a difficult few months to make sense of.

But beneath the headlines, there is a different story.

Strong underlying demand

Private equity firms are sitting on around $1.7 trillion of uninvested capital globally, and that money needs to be put to work. Mid-market businesses are increasingly seen as good value, and the weakness of sterling is drawing interest from overseas buyers. Good businesses continue to attract serious attention from both financial and trade buyers.

It is also worth noting that geopolitical disruption creates winners as well as losers. Some are obvious – defence, cybersecurity and renewable energy. Others less so. Professional services firms, for instance, are finding strong buyer appetite. Owners in these sectors may find the current moment more favourable than the mood music suggests.

For some, continued uncertainty is prompting a more direct look at their options – whether now is the right moment to realise value, reduce risk or take greater control of what comes next. For others, it is about understanding what a sale might look like and what needs to be done to prepare.

The market is still active, just more measured

The deal data reflects a market that is holding up.

At the smaller end, volumes eased modestly in Q1, with 230 transactions completing against 263 in the previous quarter, and total deal value moving from £7.2 billion to £6.2 billion. The slight cooling is notable but not alarming – the underlying level of activity remains solid.

At the upper end, the headline figure is striking. While volume held broadly steady at 55 transactions, combined deal value surged from £65.1 billion to £110.4 billion – the strongest quarterly total since late 2020. Much of that reflects McCormick's £33.6 billion acquisition of Unilever Foods, but even setting that aside, the trend is firmly positive.

Buyer sentiment tells a similar story. Those expecting deal volumes to rise climbed from 33% to 47% over the quarter. More than 70% report that geopolitical uncertainty has not materially changed their appetite to invest. The dominant mood is one of measured confidence rather than anxiety.

On credit, conditions have tightened. The proportion of buyers reporting improving debt availability fell from 50% last quarter to 29%, while those seeing conditions tighten rose from 8% to 18%. Financing a deal is perceived as harder than it was three months ago. That said, the majority still report conditions as broadly neutral, and buyers remain active.

What this means for owners

In that environment, preparation matters. Buyers are active but disciplined. They are looking for businesses that can demonstrate resilience, clarity of strategy and a well-evidenced growth story.

You may have spent decades building a business. The value you have created is real. In this uncertain world, finding the right buyer – one who will give you an exit while preserving what you have built – can provide the certainty that the broader environment cannot.

For owners considering a sale over the next few years, this is often the right moment to start engaging. Early conversations allow time to prepare properly, understand how buyers will view the business and take control of the process, rather than reacting to it later.

If you are starting to think about your options, an early conversation can be a useful place to begin.

Read more in the April edition of UK Private Company Director.