Initial optimism regarding the return of a pro-business White House has shifted. Constant tariff threats have introduced a degree of uncertainty to the markets and leaders.
This is evident most recently in the decision by Rachel Reeves not to attend an event after the US threatened to add tariffs of up to 25% on eight European countries, including the UK.
The market reaction to the threat was also instant. European equities sank while London shares fell alongside global indices, as investors digested the tariff shock.
Though the US subsequently softened its stance, confidence has eroded and dealmakers have taken note.
Adaptation
Over the past year, successful UK dealmakers have adapted to heightened volatility by extending due diligence timelines. This is evident on Datasite, which annually facilitates about 19,000 new deals. Due diligence times on Datasite rose globally in the fourth quarter as buyers conducted more rigorous assessments. Dealmakers also added more flexibility into deal agreements, adding protections that could adjust if conditions changed.
This disciplined approach paid off. Global deal kick-offs on Datasite were up 9% in 2025 compared to the same time a year ago. This signals strong appetite for transactions this year, since these are deals at inception rather than announced.
This is, in part, a result of increased private transactions. Private equity canโt afford to stop dealmaking. With substantial dry powder to deploy and performance pressures from limited partners, PE firms must continue pursuing opportunities. The private markets offer advantages that become even more valuable in uncertain times: flexible deal structuring, the ability to take a long-term view, and insulation from daily market swings.
AI and 2026
AI was also a major factor in the market direction in 2025, influencing strategy, dealmaking, adoption and portfolio focus. It became central to deal efficiency, valuation modelling and integration planning. As companies accelerate deployment, corporate and private equity buyers are competing for businesses with established AI infrastructure, machine learning expertise and proprietary data. This has driven higher valuations, faster diligence and more focused execution after completion.
Dealmakers are also using AI more in how they complete and manage their daily work.
New Opportunities
This year even more is expected. To compete, UK dealmakers must continue to deepen their risk assessment capabilities, mapping vulnerabilities across supply chains and regulatory exposures. They also need to take advantage of the newest technological advances to shorten deal times and move fast in a market which rewards speed.
UK dealmakers may also benefit from the trade turbulence. The current 10% US tariff on British goods is notably lower than the 20% faced by some EU competitors. This differential could provide UK manufacturers with a temporary competitive advantage in global markets, if these levels persist. Meanwhile, growing risks to US equities could accelerate the long-awaited pivot of capital toward European and UK markets, potentially breathing new life into London’s status as a global financial centre.
The path forward requires accepting that policy uncertainty is now a permanent feature of the landscape, not a temporary hitch. Dealmakers who adapt their processes and maintain conviction through volatility will find that pent-up demand and fundamental business ideals continue to drive transactions. Creative structuring, earn-outs tied to policy outcomes, and enhanced contractual protections will become standard features of deal documents. The complexity increases, certainly, but complexity has never deterred serious dealmakers.
Leave a Comment