Stormy Times with a Bright Outlook
As we navigate through April 2025, the mergers and acquisitions (M&A) landscape is experiencing plenty of noise, influenced by the shifting sands of substantial US tariffs.
What is the outlook for the UK?
A recent article in The Economist pointed towards a rather positive future, one that feels right in our view.
In a rare twist of fate, the UK, long the economic whipping boy of global shocks, may find itself playing a steadier hand amid the looming trade storm unleashed by Donald Trump’s tariff revival.
Where the UK economy once bore the brunt of the various market downturns driven by the pandemic, the Lehman Bros domino effect in 2008 and Brexit, it now stands—almost paradoxically—marginally better insulated than its peers as globalisation shudders.
Trump’s tariff artillery is aimed squarely at goods, and the UK’s comparative reliance on services—think law, M&A, finance, consultancy—acts as an unintentional shield. Unlike German manufacturers or East Asian exporters, Blighty’s exposure is more white-collar than steel-toed.
That’s not to say all is rosy. The real spectre lies in European economic contagion: if the Continent’s markets shiver, the UK will likely catch a cold. But here too, the Bank of England has monetary dry powder to deploy—its current interest rate provides ample room for cuts. The central bank’s inflation-fighting credibility may be wobblier than it cares to admit, but falling energy and import prices could yet act as a deflationary balm, particularly if the UK swerves the temptation to slap on retaliatory tariffs.
In all of this, the UK’s relative advantage owes less to strategic brilliance than to geopolitical serendipity. Yet, there is a whiff of opportunity. Should the UK use this moment to sweeten relations with the EU—or even roll back growth-stifling tech regulations under the guise of Trump-induced necessity—it could quietly rewire its trade posture.
Call it accidental diplomacy or pragmatic opportunism, but in a world reordering its supply chains and allegiances, the UK’s unusual position at the edge of the tariff crossfire may prove more lucrative than lonely.
What about the UK market outlook for M&A?
After several years of economic indigestion—marked by wheezing inflation, twitchy interest rates and geopolitical indigestion—the UK’s M&A engine is, remarkably, sputtering back to life. In a landscape where optimism has been in short supply, 2025 is shaping up to be the year Britain remembers how to do deals again.
According to the latest gospel from Ansarada, deal volumes have surged by 57% year-on-year to a staggering $306 billion. A trace of normality has returned, driven largely by the resumption of private equity’s beloved pastime: buying and building. Armed with dry powder and emboldened by narrowing valuation gaps, PE firms are coming out of hibernation, albeit with more modest leverage this time round. And corporate buyers still sit on enormous cash reserves, all needing a home (less shareholders decide they would rather see cash repatriated to themselves).
Yet, let’s not pretend this is a riskless renaissance. Interest rates may be heading south, but they remain elevated enough to keep boardrooms cautious. The UK capital markets are undergoing their own existential therapy sessions, with revamped IPO rules hoping—somewhat desperately—to recapture London’s financial lustre.
Meanwhile, AI is storming the diligence battlefield, promising to turbocharge analysis, though not without the occasional spurious output. Risk mitigation is now fashionably done via earnouts, preferred shares, and staggered exits—less big bang, more cautious choreography. That certainly chimes with our experience here.
On the regulatory front, it’s a jungle out there. With the National Security and Investment Act flexing its muscles and global antitrust watchdogs peering into every corner, dealmakers are rediscovering the virtues of patience—and legal advice.
Still, in a fragmented global landscape, Britain’s M&A market appears surprisingly coherent. Consolidation in tech, sustainability, healthcare and energy transition continues apace. And in true British fashion, while the rest of the world panics about Trump 2.0, dealmakers here seem quietly determined to just get on with it.
Peering out of TheNonExec’s financial window, we are the busiest we have ever been in 15 years. With 5 x sale mandates in play, a further 4 x lined up for the next 12-months, we see absolutely no change in the level of interest from potential buyers to acquire.
If you are interested to weigh your options on whether now is the right time to sell, why not call us for a confidential discussion…
Tags: April 2025, Outlook, UK
