Conflict, capital and corporate strategy, what the data is already telling us

Nearly four months into the year and many of the assumptions that underpinned predictions for 2026 are already being challenged. For this edition, we look at the first signs of the Iran War’s impact on capital markets and M&A, both globally and in the UK.

Geopolitical shocks test the resilience of capital markets, but they also reveal where conviction remains strongest, with M&A also acting an early warning system for the wider economy.

For partners and BD specialists, these signals are not abstract. Shifts in deal structures, capital sources and timing decisions often surface months before the consequences are felt across other areas, and have real repercussions for sector and practice group strategies across the board.

The big trends – recalibration rather than retreat

The early market response to the US–Iran conflict shows a clear divergence in activity across IPOs and M&A, with corporates, boards and investors adapting quickly to volatility rather than retreating wholesale.

Growth expectations have softened, with the IMF cutting global and UK growth forecasts. There is room for optimism, however. Equity markets have proven more agile than expected, as investors reprice and move rapidly into AI‑driven opportunity. The UK is also expected to rebound more quickly relative to European peers in 2027, reinforcing a cautiously improving growth narrative.

IPOs: volatility pauses pipeline, not ambition

IPOs remain the most exposed part of the capital markets. Global activity fell to asix‑year low in Q1 according to EY, but the headline numbers mask significant regional and sectoral variation. US listings dropped sharply year‑on‑year, while issuance in China moved in the opposite direction, underlining how local market dynamics still matter enormously in a global shock.

Sector concentration is also telling. Advanced manufacturing and technology dominated global issuance by value, while defence‑related listings gained further traction across EMEA. This reflects longer‑term shifts as well as short‑term conflict reactions.

In the UK, the fragile recovery in listings has paused. Volatility remains the natural enemy of IPO pricing, prompting boards to reassess timing rather than pursue sub‑optimal valuations. PwC note that activity has not disappeared but has changed shape, with companies using alternative equity mechanisms such as accelerated bookbuilds and follow‑on capital raises. IPOs will also happen, but the timing is likely to be in late 2026 or 2027.

Before the conflict, 2026 was widely positioned as a tech‑led IPO year. That assumption is now being stress‑tested, with focus shifting towards fewer but substantially larger transactions, including potential mega‑listings in US.

More widely, finance directors are extending IPO timelines into late 2026 and beyond, seeking to avoid the “geopolitical discount” currently priced into equity markets. Defence, infrastructure, AI and energy assets are emerging as relative beneficiaries, supported by increased sovereign spending and security‑driven strategy.

PwC predict demergers and cross-border listings will underpin equity issuance momentum in London. Sector wise, financial services, industrials, energy and technology are predicted to buoy the IPO pipeline.

M&A: Strategy Over Sentiment

While IPOs have stalled, M&A has accelerated. S&P Global published data this week that points to global dealmaking recording its strongest start since 2021. JP Morgan also note that companies are still prioritising scale, resilience and transformation rather than opportunistic expansion.

Values trumped volumes globally. In Europe, M&A transaction values rose 34% year over year to €192.82 billion in the first quarter, despite a 13% decline in deal volumes.

Cross‑border M&A remains elevated as companies restructure supply chains and deepen local production capabilities. US buyers have led much of this activity, with Europe remaining prime targets for strategic capital. The UK is benefitting disproportionately – data from March 2026pinpointed the country as the second most targeted country for foreign capital, behind the US.

Private capital is also playing a growing role. With trillions in undeployed capital globally, private equity and family offices are becoming more assertive. Early‑mover advantage is translating into premium valuations, as private capital competes to secure assets aligned with longer‑term strategic themes.

Interestingly, the IMAA highlight that cyber security is front of mind across all sectors, with acquirers expected to aggressively target differentiated cybersecurity capabilities as a central deal rationale.

What this means for professional services

Where the beginning of 2026 saw cautious optimism as the overarching headline, campaigns and client conversations centred on resilience, optionality and timing should now move back to the foreground of firm positioning.

Supply‑chain strengthening, cyber resilience, geopolitical risk‑proofing and transformation‑readiness remain highly relevant topics, though messaging may need to be revised. This includes acknowledging delay and reassessment as rational board behaviour, while positioning your firm as helping clients preserve value, maintain flexibility and avoid avoidable discounts. Avoiding and countering disputes will also be high on the agenda.

Buy side requirements are also changing. If your firm targets family offices or private equity buyers, be aware that volatility may be an opportunity for those looking to take direct control or deploy dry powder.

Sector dynamics are illustrated by M&A and IPO activity. Globally, capital is still moving with conviction in defence, infrastructure, energy security, cybersecurity, data and AI‑adjacent assets. Country by country, dynamics generally reflect a flight to assets already in demand, though it’s worth double checking your assumptions in light of recent developments.

At Flare Insight, we specialise in turning fast‑moving market data into clear, decision‑ready intelligence. If you’d like tailored analysis on what these trends mean for your sector, practice group strategy or campaign position, please get in touch.