UK CEOs Turn to M&A to Power AI Transformation in 2026

The majority of UK CEOs are now treating mergers and acquisitions as the fastest route to AI capability — not organic investment alone. According to EY-Parthenon’s CEO Outlook survey of 100 large UK businesses, conducted between March and April 2026, 87% of UK CEOs expect their organisation’s appetite for M&A to increase over the next 12 months, with enhancing technology or AI capabilities cited as the top acquisition criterion by 46% of respondents.

This is a structural shift in how UK boardrooms think about dealmaking. The question for senior leaders is no longer whether to pursue M&A — it is how to govern it, price it, and integrate it without losing the value that justified the deal in the first place.

Why Are UK CEOs Suddenly More Active on M&A?

Three forces are converging. First, macroeconomic conditions have stabilised sufficiently to reopen deal pipelines that stalled in 2023 and 2024. Second, the race to deploy AI at scale has created urgency: 74% of UK CEOs in the same EY survey say they plan to increase AI investment this year compared to 2025, and many have concluded that acquiring capability is faster than building it. Third, shareholder pressure for value creation is prompting boards to scrutinise portfolios — divesting non-core assets to concentrate capital on higher-return businesses.

The result is a market that KPMG and Slaughter and May both describe as the “Year of the Carve Out”: companies simplifying structures, unlocking capital, and resetting their strategic perimeter. Average deal size rose 28% last year, driven in part by the premium placed on data centre, cloud, and digital infrastructure assets.

INFORMD has been tracking these signals across executive briefings throughout 2026 — the pattern is consistent: UK boards are moving from selective dealmaking to a more systematic M&A programme, and the governance infrastructure in many organisations has not kept pace.

Executive Actions:

• Review your organisation’s deal thesis: is it still framed around scale and geography, or has it been updated to reflect AI capability acquisition as a primary rationale?
• If you are considering carve-outs, stress-test the asset perimeter before any market engagement — partial separations that drag over 18 months erode more value than the sale recovers.
• Use the executive readiness assessments on this site to benchmark your board’s current M&A governance posture.

What Is Driving the AI-First Acquisition Agenda?

UK CEOs are no longer acquiring companies for their revenues alone. Increasingly, the target is the AI stack: proprietary models, clean training data, specialist engineering talent, and integration architecture that would take years to replicate organically. Faculty’s acquisition by Accenture — one of the most closely watched UK AI deals of the past 12 months — is representative of a broader pattern in which established enterprises buy capability rather than build it.

The second driver is workforce. The EY survey found that over the next three years, UK leaders plan to redesign roles to combine human and AI capabilities (43%), invest in large-scale reskilling (42%), and increase hiring specifically for AI, data and digital roles. Acquisitions that bring this talent pool in-house are being valued at a premium over traditional earnings multiples — a dynamic that CFOs need to account for in deal modelling.

Strategic fit remains the second-ranked acquisition criterion at 45%, just below AI capability enhancement — which tells boards something important: deals that pass the technology test but fail the strategic coherence test are still likely to underperform.

Executive Actions:

• When evaluating an AI-focused acquisition, require the deal team to produce an explicit AI capability map — what does the target have that you cannot build in 24 months at competitive cost?
• Ensure your CFO’s valuation model includes talent retention risk post-close, particularly for engineering and data science teams who hold the institutional knowledge the deal was designed to acquire.
• Review the technology strategy review template on this site to stress-test whether a prospective acquisition genuinely advances your digital agenda.

How Should the Board Govern AI-Driven M&A?

Board oversight of M&A has always been a governance challenge. AI-driven deals add a further layer of complexity — few non-executive directors have the technical background to independently assess whether an AI capability claim made in a deal prospectus is credible, differentiated, or already commoditised by open-source alternatives.

The practical response is not to require every NED to become an AI expert, but to establish the right interrogative discipline. Boards should be asking: How was the AI capability assessed, and by whom? What is the retention plan for key technical staff? How does this acquisition interact with our existing technology architecture? What are the data governance obligations we are acquiring alongside the capability?

On the regulatory dimension, UK M&A involving data-heavy AI businesses will increasingly attract scrutiny from the ICO on data protection grounds, the FCA where financial services applications are involved, and the Competition and Markets Authority — whose Digital Markets Unit has expanded its remit under the Digital Markets, Competition and Consumers Act. Boards should ensure legal and compliance are in the room at term sheet stage, not just at due diligence.

Executive Actions:

• Appoint a board-level M&A AI sponsor — a NED or executive director with sufficient technology fluency to challenge the deal team’s AI capability assessment.
• Build a standard regulatory pre-clearance checklist that covers ICO, FCA, and CMA exposure for any AI-focused deal above a defined size threshold.
• Explore the INFORMD briefing library for intelligence on digital markets regulation and AI governance obligations relevant to UK acquirers.

Where Does Integration Risk Sit in This Environment?

Dealmakers across the market — from KPMG’s M&A Outlook to Barclays Investment Bank’s 2026 analysis — are consistent on one point: the most likely reason a deal fails to deliver value in 2026 is execution risk, not headline price. Buyers have become more sophisticated about integration; sellers have become better at presenting clean data rooms. The discipline that separates successful acquirers is what happens in the 100 days after close.

For AI-focused deals, integration is more complex still. Technical debt in the acquired system, incompatible data architectures, and the cultural friction between engineering-led startups and process-heavy enterprises are all documented destroyers of post-deal value. Research from Deloitte suggests that AI companies being acquired are rewriting the M&A playbook — buyers who treat them as conventional bolt-on acquisitions consistently underperform.

UK CEOs who are targeting domestic growth — the leading priority market identified in the EY survey, ahead of the US, Germany, and India — will find that integration capability is the strategic differentiator that makes their M&A programme sustainable rather than a one-cycle opportunity.

Executive Actions:

• Assign a dedicated integration lead at the point of exclusivity, not after signing — the best integration plans are written while due diligence is still live.
• For AI acquisitions specifically, build a 90-day technical integration review into the deal timeline and resource it with internal engineering leadership, not just external advisers.
• Consider the capital approval template on this site to structure your board’s investment case approval process for M&A decisions above capital thresholds.

INFORMD provides intelligence briefings for senior business leaders across technology, finance, strategy, and compliance. Based in Milton Keynes, UK, we help executives stay informed and act with confidence. Explore our full library of executive briefings or speak to our team.

Stay ahead. Subscribe to INFORMD’s executive briefing at informd.co.uk/services.

Frequently Asked Questions

Why are UK CEOs increasing M&A activity in 2026?

According to EY-Parthenon’s 2026 CEO Outlook survey of 100 large UK businesses, 87% of UK CEOs expect M&A appetite to increase over the next 12 months. The primary driver is the need to acquire AI and technology capabilities faster than organic investment allows, alongside shareholder pressure to divest non-core assets and reallocate capital toward higher-return businesses.

What are the main risks for boards in AI-focused acquisitions?

The principal risks are execution and integration: deals are more likely to fail post-close than at valuation. For AI-specific deals, additional risks include technical debt in acquired systems, incompatible data architectures, regulatory exposure under UK GDPR and ICO guidance, and the cultural mismatch between engineering-led targets and process-heavy acquirers. Boards without AI-fluent oversight are systematically exposed to overpaying for commoditised capabilities.

What is a “carve-out” and why is 2026 considered the Year of the Carve-Out?

A carve-out is the separation and sale of a business unit or subsidiary from a parent organisation. UK companies are pursuing carve-outs in 2026 to simplify corporate structures, unlock capital tied up in non-core operations, and sharpen strategic focus on AI-enabled growth areas. The trend reflects both shareholder pressure for clearer value creation narratives and a more active deal market willing to absorb separated assets at competitive prices.

How should a CFO approach valuation for an AI capability acquisition?

Traditional DCF and earnings-multiple models are insufficient for AI-focused targets. CFOs should layer in talent retention risk — the departure of key engineering staff can eliminate the capability value the deal was designed to capture — alongside a realistic assessment of the cost and timeline to integrate the acquired technology stack. A parallel build-versus-buy analysis, assessed against a 24-month horizon, provides the board with the reference point needed to justify the acquisition premium.