Why 65% of UK Investors Are Strengthening Due Diligence in 2026

Due Diligence Services

In an increasingly unpredictable global economy, financial due diligence services have emerged as a strategic imperative for investors in the United Kingdom. According to multiple market intelligence reports and industry surveys, approximately 65 percent of UK investors are significantly strengthening their due diligence practices in 2026. This shift reflects rising uncertainty across capital markets, heightened regulatory complexity, technological disruption, and the pressures of cross-border investing. While due diligence was once viewed as a compliance check, it has now evolved into a value-creation engine that enhances investor confidence and mitigates risk in high-stakes transactions.

This article examines the key forces driving this trend, including the latest figures from 2025 and early 2026, and highlights how rigorous due diligence is reshaping investment strategies across sectors from mergers and acquisitions to private equity and venture capital deals.

The Rise of Due Diligence as a Strategic Priority

Historically, investors tended to rely on internal financial analysis and industry experience to make investment decisions. However, the post-pandemic market environment has magnified the limitations of traditional approaches. In 2025, UK dealmaking was marked by contrasting trends: overall merger and acquisition (M&A) activity showed £57.3 billion in total deal value with 1 478 completed transactions, yet investors became more selective about which deals moved forward.

This shift signaled a deeper transition: the cost of error in investment decisions has never been higher, and the ability to detect hidden risks before committing capital is now a defining competitive advantage. A recent analysis observed that thorough due diligence can uncover hidden liabilities equivalent to roughly 26 percent of unstated risk in UK deals, a revelation that underscores just how much value can be lost without comprehensive scrutiny. 

Against this backdrop, financial due diligence services have become a core component of investor playbooks. They are no longer a box-ticking exercise but a fundamental mechanism for validating assumptions, interrogating forecasts, and managing uncertainty at every stage of investment.

Market Dynamics Fueling Due Diligence Demand

Two broad market dynamics are driving this intensified focus on due diligence among UK investors: market volatility and regulatory pressure.

Market Volatility and Strategic Selectivity

In 2025, the UK witnessed a surge in foreign acquisitions that drove deal value higher even as transaction volumes fell. Overseas buyers executed $142 billion in UK takeovers, a 74 percent increase from 2024, indicating a preference for fewer but larger and more strategic deals.

Investors have responded by prioritising depth over breadth in their investment pipelines, choosing to devote more resources to quality assessment before moving forward. This selectivity increases the role of due diligence in ensuring that costly mistakes are avoided and that time-consuming negotiations are grounded in verified data and robust risk analysis. In this context, due diligence is not an optional luxury but a risk-management necessity.

Advanced analytics and artificial intelligence are also reshaping how due diligence is conducted. Latest industry insights show that AI adoption in due diligence processes is expected to reach 54 percent by 2025, up from 31 percent in 2022, driven by the potential for faster evaluation and improved fraud detection. 

Regulatory Complexity and Compliance Burden

The regulatory environment in the UK has become stricter, especially in areas such as anti-money laundering, know-your-customer (KYC) requirements, and valuation transparency. Regulators like the Financial Conduct Authority have explicitly urged asset management firms to improve valuation processes and to disclose conflicts of interest more robustly, reflecting broader compliance expectations. 

Increased regulatory scrutiny amplifies the cost of non-compliance and reputational risk for investors who fail to conduct adequate checks. Consequently, investors are turning to external specialists with deep expertise in legal, financial, and operational risk to support and enhance internal review processes. This trend reinforces why financial due diligence services are now fundamental to investor confidence and security in complex transactions.

Components of Enhanced Due Diligence

Modern due diligence extends well beyond basic financial statement reviews. Today’s investors increasingly demand depth, precision, and multi-dimensional risk intelligence spanning several critical areas.

Financial and Tax Due Diligence

Financial due diligence remains the backbone of investment assessment. In 2026, this segment of the market experienced a 9.1 percent compound annual growth rate, supported by strong demand from private equity and corporate buyers seeking verified historical performance and reliable forecast data.

• Over 70 percent of private equity transactions now include sophisticated real-time dashboards and scenario modelling.

• Tax due diligence grew by 12 percent in 2026, driven by multinational investors navigating complex cross-border tax risks.

These figures reflect how deeply investors depend on precise, data-driven insights to evaluate fairness of pricing, capital structure, and future earnings projections.

Operational and Strategic Risk Assessment

Operational due diligence assessing management quality, operational KPIs, and system integration risks grew by 19 percent in 2026, especially in tech, healthcare, and logistics sectors.

Beyond purely financial review, investors now demand insights into operational viability, scalability, and resilience, particularly for growth investments and highly innovative targets. This focus ensures that deals are not merely financially sound but also operationally sustainable.

ESG and Non-Financial Considerations

Environmental, Social, and Governance (ESG) due diligence has gained dramatic prominence. A report found that 80 percent of UK investors now prioritise ESG as part of investment evaluation, recognising that poor compliance can significantly reduce long-term value or even stop deals altogether.

In many sectors, ESG factors from carbon footprint scoring to diversity governance are not just reputational touchpoints but core components of risk assessment and future profitability.

Technology’s Transformative Role

Technology especially artificial intelligence and advanced analytics is reshaping how due diligence is executed, allowing investors to uncover risk faster, more accurately, and with greater confidence.

AI-enhanced platforms can extract key contract clauses, identify risk outliers, screen for hidden liabilities, and automatically benchmark findings against industry norms. Reports indicate AI can cut review time by up to 50 percent while improving risk detection by 20 to 30 percent. 

This leap in analytical capability provides investors with richer insights at a faster pace, a critical advantage in competitive bidding scenarios and markets where speed and clarity can determine success.

Global Market Outlook and UK Position

The global market for due diligence services continues to expand robustly. Estimates project that the overall industry will grow to approximately $10.6 billion in 2026, up from nearly $9.7 billion in 2025, a growth rate of around **9.3 percent year-on-year driven by regulatory, systemic, and investor demand. 

Within this broad market, financial due diligence as a subset commands significant attention from investors, composed of nearly 38 percent of total demand internationally. 

The UK plays a prominent role within Europe due to its sophisticated capital markets, advanced legal infrastructure, and high inflows of foreign investment. Although total foreign direct investment projects dipped to a record low of 1 375 in the year ending March 2025, the value and strategic intrusion of these deals continue to attract serious investor focus. 

Impacts Across Investor Categories

Strengthened due diligence is not limited to a single class of investor. From institutional investors managing pension funds to private equity firms chasing growth, different investor types are aligning their priorities:

• Private Equity and Venture Capital: Spend on due diligence has increased as capital is deployed in more complex, cross-border deals with strategic growth expectations.

• Corporate Diversifiers: These buyers are demanding deeper operational insights to understand integration risks post-acquisition.

• Retail and High-Net-Worth Investors: Even smaller allocations now require at least a baseline level of rigorous review, especially for alternative assets such as private debt and infrastructure.

Such broad uptake underscores the universal value proposition of rigorous risk assessment and reflects why 65 percent of UK investors now prioritise strengthened due diligence.

Challenges to Effective Due Diligence

Despite clear benefits, investors face challenges in fully leveraging due diligence:

• Data Accessibility: Around 52 percent of companies face issues accessing high-quality data, slowing the review.

• Skills Shortage: A shortage of skilled analysts with both financial and operational expertise restricts depth of assessments.

• Cost and Time: Advanced reviews, especially those requiring specialised legal or sector-specific analysis, can be expensive and time intensive.

Addressing these challenges requires targeted investment in tools, training, and partnerships with expert firms.

In a world defined by rapid change, stringent regulation, and intense competition for capital, it is no surprise that 65 percent of UK investors are strengthening their due diligence practices in 2026. This trend reflects a profound evolution in how investment risk is understood and managed.

From uncovering hidden liabilities to integrating environmental and operational risk, today’s due diligence protocols are comprehensive, data-rich, and increasingly technology-driven. As the market continues to expand with the global due diligence services industry projected to exceed $10.6 billion in 2026 investors who embrace rigorous evaluation frameworks are best positioned to succeed.

Above all, financial due diligence services stand at the centre of this transformation, not just protecting investor capital, but actively enabling smarter, more resilient, and strategically sound investment decisions in the dynamic year ahead.