UK security-tech dealmaking remains buoyant as further growth in 2026 predicted
The security-tech sector is in a period of strategic acceleration and with it presents a huge opportunity for large corporates, SMEs, lenders and investors alike, says a new report by Heligan Group.
UK dealmaking in security technology is bucking the wider M&A slowdown, as investors pour money into defence, cybersecurity and intelligence firms amid rising geopolitical instability and growing concerns over national resilience. Interest in defence focused businesses and wider security-tech has never been greater, according to the latest Security Tech: M&A Overview and Sector Trends report from Heligan Group.
The report shows that while overall UK M&A activity fell in 2025, deal volumes in security technology remained buoyant, following a record-breaking year in 2024. The sector has now seen 845 transactions since 2018, underlining its growing strategic and economic importance. Acquirors are no longer purely acquiring technology and capability, but are increasingly targeting resilience, data, regulatory alignment, customer access and teams with clearance and expertise.
“We are seeing a surge in demand for technologies linked to defence, cyber protection and intelligence gathering, driven by heightened global tensions, escalating cyber-attacks and renewed government focus on national security,” said Matt Croker, director at Heligan Corporate Finance. “Security technology has moved from a niche investment area to a core pillar of economic and national resilience. Buyers are no longer just buying software or hardware, they are acquiring trusted teams, sensitive data capabilities and the ability to operate across defence, security and civilian markets.
“The fusion of three core themes is changing where value sits in the sector and, in turn, M&A activity. Firstly, AI-driven analytics; secondly, the convergence of physical and digital security; and finally, the national resilience strategy. Buying signals from the MoD, the private sector and intelligence agencies are increasingly focused on resilience. Businesses that align their models to these demand signals will capture greater growth and achieve premium valuations.”
Heligan’s top three security technology predictions for 2026 are as follows:
Quantum-secure technologies reach a critical inflection point
“Heightening quantum-enabled threats will accelerate the shift to quantum-resistant security, driving fresh investment and sustained M&A activity across the sub-sector,” added Croker.
Institutional capital returns to the sector
“Financial institutions and lenders are expected to soften their historically cautious stance toward security-technology assets, widening access to growth capital.”
Competitive demand elevates valuations
Cybersecurity remains the most active and valuable part of the security-tech market, supported by recurring revenues and relentless demand from both government and business. Defence-focused companies are also attracting renewed interest, as banks and institutional investors soften previously cautious attitudes towards the sector. Private equity activity is increasing, with funds returning to the market as early investments made in the early 2020s approach exit. Competition between financial buyers and corporates is also pushing up valuations, particularly for companies with dual-use technologies that can serve both military and civilian customers.
“Despite broader economic uncertainty, overseas buyers, particularly from North America and Europe, continue to target UK security-tech firms, drawn by the UK’s regulatory framework, technical expertise and access to government-backed contracts”, continued Croker. “ But regulatory complexity could dampen future momentum and the UK’s National Security & Investment Act, while designed to protect sensitive assets, is adding delays and uncertainty to transactions.
“If the UK wants to remain competitive as a destination for high-value investment, speed and predictability matter. Looking ahead, we expect further growth across the sector as defence spending rises, institutional capital becomes more accessible and emerging technologies such as AI, quantum security and autonomous systems move closer to large-scale deployment”, concluded Croker.