Q1 2026 Cyber Security update: Record private market activity amid rising uncertainty in cyber security markets

In the first quarter of 2026, M&A activity in the cyber security sector reached record levels despite heightened geopolitical tension, rapid technological change, and increasing economic pressure.

Deal volumes reached 167 with an average deal value of £480 million, compared to long-term averages of 102 and £237 million. This surge reflects a strong appetite for cyber security exposure in the context of increasing cyber threats and larger cyber security budgets translating to completed deals.

The rise in private dealmaking contrasts with a more challenging public market environment. Valuations have declined to levels last seen during periods of significant global disruption, such as the Covid-19 pandemic and Russia’s invasion of Ukraine, as investors respond to global pressures, geopolitical instability and emerging technological risks.

The rapid evolution of technologies such as agentic AI is introducing both opportunity and disruption. Structural questions are emerging around long-term market dynamics especially in the face of the so called “SaaSmageddon”.

Looking ahead, uncertainty is expected to persist. Economic changes, including potential interest rate rises and cost pressures, are likely to shift investor focus towards sustainable profitability. Despite this, cyber security remains a priority sector, and strong underlying demand is expected to support continued deal activity through 2026, although perhaps not at the current rate.

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