Why specialist products deserve a place in investment portfolios

Over the past few years, investor attention across the built environment and industrials landscape has understandably gravitated towards services and technology. Regulatory tailwinds, particularly around fire safety and compliance, have driven demand for recurring revenues, while buy‑and‑build strategies have offered rapid scale and cross‑sell opportunities. Technology, meanwhile, continues to attract capital for its scalability and margin potential.

Over the past few years, investor attention across the built environment and industrials landscape has understandably gravitated towards services and technology. Regulatory tailwinds, particularly around fire safety and compliance, have driven demand for recurring revenues, while buy‑and‑build strategies have offered rapid scale and cross‑sell opportunities. Technology, meanwhile, continues to attract capital for its scalability and margin potential.

Yet as we look ahead to 2026, there is a compelling case for revisiting specialist products—particularly advanced, low‑volume, high‑mix manufacturing, an area where the UK has long excelled.

High‑quality product businesses can offer several attractive characteristics. When aligned with structurally growing end markets, demand is often repeatable and resilient, supported by long replacement cycles and embedded specifications. Many of these businesses are underpinned by genuine intellectual property, proprietary designs, and deep application know‑how that differentiate them from both domestic and overseas competitors. Barriers to entry tend to be meaningful: significant upfront investment in capex and R&D, lengthy certification processes, and the difficulty of being approved as a supplier to OEMs or Tier 1 integrators all act to protect market positions. Crucially for investors, these dynamics often translate into clearer, more reliable forward order visibility, simplifying diligence and business planning.

End‑market selection remains critical. We see three areas in particular standing out:

• Aerospace & defence, where rising government and NATO‑aligned spending is increasingly flowing to specialist UK suppliers delivering mission‑critical components and subsystems.
• Data centres, where sustained growth driven by cloud computing and AI is creating demand for highly specified products spanning power management, cooling, fire suppression and physical infrastructure.
• Renewables and energy transition, supported by strong policy backing and a strategic push to localise supply chains, favouring UK‑based manufacturers with the right technical capabilities.

There are additional tailwinds worth noting. Reshoring trends, the need for supply‑chain resilience, and customers’ willingness to pay for reliability and compliance all enhance pricing power. Well‑run product businesses can also offer attractive exit optionality, whether to strategic acquirers seeking capability gaps or to sponsors pursuing platform builds.

While services and tech will rightly remain core areas of focus, investors may find that specialised, in‑demand products provide a complementary—and often underappreciated—route to defensible growth and value creation in 2026 and beyond.

To discuss any of these themes in more detail, please contact:

Matt McNally

mmcnally@armstrong-ts.com
+44 7894 736 523