Q2 2026 Cyber Security update: Strategic cyber security deals continue despite cooling M&A market

The cyber security M&A market volumes eased in Q2, but investors continued to back businesses with strong strategic positioning, particularly those operating in AI security, defence and critical infrastructure.

Q2 recorded 141 transactions across Europe and North America, remaining comfortably above the long-term quarterly average of 104 deals. Average disclosed deal values also increased to £275 million, reflecting enduring appetite for high quality assets despite broader macroeconomic uncertainty.

One of the defining themes this quarter has been the emergence of agentic AI security. As organisations increasingly deploy AI agents and non-human identities, buyers are targeting businesses capable of securing these increasingly complex systems.

Alongside AI, governments and investors are placing greater emphasis on cyber capabilities that support national resilience. Geopolitical tensions and increased defence spending are driving investment into defence grade cyber technologies, while regulatory developments such as the UK's Cyber Security and Resilience Bill are expected to broaden compliance requirements across more industries and supply chains.

The UK mid-market remains highly active, supported by continued consolidation among managed security service providers and sustained private equity interest. Buyers and investors are prioritising quality over growth, favouring resilient, profitable companies with mature operating models and clear long term value creation potential.

Looking ahead, uncertainty around regulation, AI and geopolitics will continue to drive investor interest in the sector, but with a focus towards proven businesses that have shown an ability to adapt to a rapidly changing context. 

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