The pace of deal activity tells us a great deal about confidence in the market. It influences leadership needs before and after transactions and reflects the ambitions of growth-minded businesses across the region.

In Lincolnshire, that confidence is often under-reported. The county’s economy is diverse - from food and agriculture to manufacturing, logistics and professional services - yet much of the deal activity happens quietly, led by entrepreneurial owners and regional funders who know the market best.

We are often asked by CFOs and FDs for a clear view of what is really happening - not just the headline deals, but the activity behind them. That is why we stay close to the dealmakers and advisors who shape the market.

As we head towards the end of 2025, with uncertainty around the economy, a potential shift in Government policy and a wave of optimism in some sectors, the question feels more relevant than ever: what is truly happening behind the headlines in Lincolnshire’s economy and how they think the upcoming budget will affect the economy in 2026.

To get an honest and balanced view, we spoke with a group of experts who are right at the centre of deal activity in the county:

How current deals activity around MBOs, M&A and EOT activity levels in Lincolnshire compare to the recent past – are deals getting done, or is there more hesitation?

Ryan Bridge

The Lincolnshire market is showing a clear split in transactional activity:

• Traditional M&A and MBOs:

Activity levels have slowed significantly compared to recent years. Macroeconomic uncertainty, valuation gaps, and tighter financing conditions have created hesitation among domestic buyers. For management teams, the personal risk associated with leveraged buyouts is higher than before. Private equity is still active but highly selective, focusing on premium assets rather than the broader mid-market.

• Employee Ownership Trusts (EOTs):

In contrast, EOTs are gaining strong momentum. For family-owned businesses—particularly those in Lincolnshire’s manufacturing sector—EOTs offer a practical and attractive exit route. Policy incentives and the desire to preserve legacy and local employment have made EOTs the preferred option, and these deals are getting done more decisively.

Why the Shift?

• Domestic caution contrasts with strong foreign investor confidence nationally, highlighting that UK assets remain attractive but local buyers are proving more risk-averse.
• Several SMEs that had initially planned to sell within the next 12 to 24 months have accelerated their timelines, aiming to complete transactions prior to the upcoming budget announcement. This is primarily to mitigate the risk of potential increases in taxation that could impact both business performance and personal tax liabilities..

At NatWest we are well-positioned to support this evolving landscape by, Facilitating transitions through tailored  financing solutions.

In summary: Deals are still happening in Lincolnshire, but the nature of those deals has changed in recent times. Traditional M&A and MBOs face hesitation, while EOTs are gaining traction.

Paul Simpson

In the last 18 months, there has definitely been an increase in the interest for EOTs as a possible exit route and as a result MBOs have not always been the first choice for owner-managed businesses.  That said, in the last couple of months we have been looking at some potential MBOs and I wonder if the interest in EOTs is now heading back towards MBOs.

Trade sales are still happening but the process has been slower.  Buyers and investors are certainly putting more resources into the due diligence process.

James Sewell

We are still seeing deals being done.  There was a mad rush last year leading up to the October budget and the speculation around increases to Capital Gain Tax.  We are now seeing some hesitation (in more sectors than others), because of uncertainty in the economic climate and increasing costs.

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What is happening behind the doors of banks and funders – are they still deploying capital, and how has access to finance changed?

Ryan Bridge

NatWest: Strength and Commitment to UK Business Growth

NatWest remains well-capitalised and positioned to support businesses across the UK economy. With a Common Equity Tier 1 (CET1) ratio of 13.8% and a Liquidity Coverage Ratio (LCR) of 150%,(well above the 100% minimum regulatory requirement). We have the resilience and liquidity to fund growth for both SMEs and corporates.

We are actively deploying capital through tailored lending and growth solutions, championing businesses with strong fundamentals and ambitious plans.

While access to finance has become more rigorous across the market, NatWest continues to take a proactive and positive approach. We combine disciplined risk management with flexibility, ensuring businesses can secure the funding they need to thrive.

Our tailored funding solutions include:

• Working Capital Facilities – supporting day-to-day liquidity and operational needs.
• Trade Finance and Export Facilities – enabling businesses to manage international trade flows and mitigate risk.
• Intellectual Property Funding – helping innovative firms leverage IP assets for growth.
• Lombard Asset Finance – Helping fund traditional plant and machinery as well as IT and software

NatWest remains committed to being a trusted partner for UK businesses, delivering flexible funding solutions that empower growth and innovation.

Paul Simpson

The banks are certainly open for business and from my experience clients have had access to funding without any difficulties.

James Sewell

The banks and funders are keen to support businesses with the right proposition.  We are seeing more vendor financed deals, probably for a variety of practical reasons.  Commercial finance brokers are able to keep abreast of changing appetites of different funders and assist in finding more bespoke options depending on circumstances.

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‍What types of deals are most active – trade sales, MBOs, bolt-ons, buy-and-build strategies or something else?

Ryan Bridge

NatWest Perspective on Deal Activity

The Lincolnshire market reflects broader national trends. Traditional M&A and MBO activity has slowed significantly due to macroeconomic uncertainty, valuation gaps, and tighter financing condition as stated previously. Domestic buyers remain cautious, and management teams face heightened personal risk in leveraged buyouts. Private equity is still active but highly selective, focusing on premium assets rather than the wider mid-market.

Employee Ownership Trusts (EOTs), however, are gaining strong traction, particularly among family-owned businesses. Policy incentives and the desire to preserve legacy and local employment make EOTs an attractive and decisive exit route. Many SMEs have accelerated transaction timelines ahead of potential tax changes, adding further momentum.

Most notably, we are seeing a surge in requests for working capital funding. Supply chain disruptions and liquidity pressures are driving businesses to seek flexible financing solutions to maintain operations and safeguard growth plans. This trend highlights the critical role of responsive funding in helping companies navigate short-term challenges while positioning for long-term success.

At NatWest, we remain committed to supporting this evolving landscape through tailored funding and strategic guidance.

Paul Simpson

For me the last 12 months have seen trade sales and acquisitions with a couple of transactions that have been part of buy-and-build strategies.  

Owner managed businesses and in particular farming partnerships are concerned about the forthcoming changes in IHT.  Businesses have been obtaining asset valuations and have been looking at moving assets to family members and possible de-mergers.

James Sewell

We continue to see a number of MBO’s, often to facilitate to retirement of the owner. With the recent tax changes we have seen, particularly around CGT, business owners are looking at their exit strategies earlier and undertake more detailed planning than ever before. A lot of deals are being facilitated by deferred consideration of seller.

We have seen all the types of deals, maybe a slight decline in trade sales and increased MBOs. There is also a lot of consolidation in a lot sectors.  

We have also seen the impact of an increase in foreign investment. This has gone into areas such as engineering and defence (because of high number of RAF bases), two sectors where Lincolnshire has a strong presence and has seen very high levels of growth in the past few years.

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What is the outlook for 2026 and beyond?

Ryan Bridge

NatWest Economic Outlook for 2026

The UK economy is expected to stabilise and show moderate growth in 2026:

• GDP Growth: Forecasts point to a moderate growth through 2026.
• Inflation: CPI inflation is projected to ease to approximately 3%, from mid 2026 moving closer to the Bank of England’s 2% target.
• Interest Rates: Monetary policy is likely to remain accommodative, with rates potentially falling to around 3.75% / 3.5%, creating a more favourable environment for investment.
• Wages: Wage inflation is showing signs of easing with overall wage growth overall trend down.

Overall, the outlook suggests diminishing headwinds from inflation and interest rates, offering a more stable, though cautious backdrop for growth and investment.

NatWest Future Fit Framework

To help businesses thrive in this evolving landscape, NatWest advocates four strategic pillars:

1. Sustainability: Moving beyond compliance, sustainability becomes central to strategy—driving efficiency, reputation, and new opportunities. NatWest supports this through tools like Carbon Planner and sustainable asset financing.
2. Technology: Digital transformation and AI adoption will be critical for competitiveness. NatWest offers financing, accelerator programmes, and tech partnerships to enable this shift.
3. Talent and Skills: Addressing skills shortages requires continuous training and flexible, purpose-driven cultures.
4. Supply Chains: Building resilience and visibility is key. Collaboration with suppliers and risk mitigation will be supported through working capital & trade finance solutions.

Paul Simpson

This is very difficult to predict in advance of the budget on 26 November – whatever changes are implemented will impact business activity in 2026.

James Sewell

I am going to stay positive for the benefit of those still reading. I think we are in for a challenging time. Certain sectors such as hospitality and agriculture are going to have to brace themselves and work as best as they can. Private equity investment looks set to continue with professional services being a core focus.

We are expecting the interest in MBO’s to continue to increase and also EOT’s, as awareness of this model increases.

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The leadership angle

At Pratap Executive, we see the impact of the deals market most clearly through the leadership appointments we make. In Lincolnshire, the picture is distinctive - a region with deep roots in Agriculture, FMCG and Manufacturing, where many businesses combine strong heritage with forward-looking ambition.

Privately owned companies remain the heartbeat of the local economy. Despite the well-documented economic challenges, many of these organisations are flourishing — investing in people, planning for succession and creating new opportunities through growth and diversification. Their ability to adapt and invest for the long term continues to drive both stability and innovation across the county.

We are working with a growing number of these businesses as they strengthen their leadership teams — some gearing up for acquisition-led expansion, others preparing for the next generation of ownership or management. Each story reflects the resilience, pragmatism and optimism that define Lincolnshire’s business community.

The connection between leadership and deal activity is clear - it is well-led, privately owned businesses that are shaping Lincolnshire’s next phase of growth.

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Charlotte Morgan Smith

Director

charlotte@pratappartnership.com

07599212313