The Rise in Buy-and-Holds

Insights by Peter Watson.

As detailed in our most recent M&A report, the share of deals has doubled in the last 6 months.

What is driving this increase and what does it mean for owner-managed businesses? Perhaps best to define what we mean by buy-and-hold – essentially this is an “everlasting” fund or group that holds companies for the long term, with no intention to “flip” the businesses for a higher profit.

At one end of the spectrum is Constellation Software Group, the quoted Canadian operation with over 1,100 software businesses, at the other end are family groups such as Milbank Group (diversified portfolio) with 14 distinct businesses. The latter is a good example of the increasing interest in diversified industrials. This model has long been present in Scandinavia – originally with Bergman & Beving which was founded in 1906 and began as a simple importer of equipment for Nordic factories. The business was one of the first to operate a buy-and-hold model and was eventually split into 3 separate companies, which includes Lagercrantz Group.

There is good historical precedent for these types of groups, but why are they on the up? There is some evidence that traditional private equity is not always working as intended. The New York Times has reported on data from PitchBook showing there were over 33,000 unsold PE-owned companies at the end of June, more than double the number from a decade ago. Whilst the PE model is certainly not broken, the success of Constellation Software and others has encouraged more buy-and-holds to enter the market (many started by its former employees).

How does this affect owner managers of UK businesses seeking an exit? Whilst traditionally buy-and-hold investors have generally offered lower valuations, the increasing competition for good companies is pushing up prices. Add to this continued interest from trade buyers as well as traditional PE, and the future environment for owners of software and IT services (SITS) businesses looks pretty positive, despite the threat from AI.

For more of our analysis and a general view on UK SITS sector acquisition activity in H1 2026, please read our latest report – State of M&A in the UK Software & IT Services Sector. To request your free copy of the report, if you are already on our emailing list you can email us directly, otherwise please complete the web form here.