Reflections on the M&A Market in 2025
If you talk to M&A dealmakers just now, you sense something that’s been absent for three years: not euphoria, but a kind of cautious swagger.
After a long spell in the doldrums, global M&A has started to move from convalescence to something closer to rude health. Global deal value in 2024 recovered to roughly the mid-2010s norm – about $3.5 trillion – and, crucially, volumes and values were up mid-teens year-on-year, even though activity as a share of global GDP is still at a 20-year low. In other words, appetites are coming back before the market has had its full main course.
What’s changed?
In essence, the fog has thinned. Boardrooms now have a clearer sense of where interest rates, regulation and politics are heading – not perfect visibility, but good enough to justify pulling the trigger! Corporate buyers accounted for around 70% of deal activity in 2024, up sharply from the frothier, sponsor-led years before the tightening cycle, as CFOs used strong balance sheets to reshape portfolios and buy capabilities, they can’t build quickly enough themselves.
M&A Trends
At the same time, private equity’s patience is fraying: dry powder is near record levels, exits have lagged badly since 2020, and the next two to three years are expected to see more than a thousand billion-dollar-plus portfolio companies pushed towards a sale or IPO.
That backlog is meeting a new deal logic. The cheap-money era of “growth-at-any-price” is over; buyers are insisting that transactions wash their face on both revenue and cost synergies, and they want the value creation now.
A recent report by Bain & Co shows scale deals – the classic “buy your rival, cut the overlap” play – back up to their highest share of large strategic transactions since 2015, as acquirers look for hard, bankable economics. At the same time, a quiet revolution is under way in “simplification”: big corporates carving out under-loved divisions, spinning off non-core assets and region-specific businesses, often under the not-so-gentle encouragement of activists.
Those spin-offs, history tells us, beget yet more deals as newly independent companies tidy up their portfolios.
Layered on top is the AI arms race. Across various market reports, there is an almost evangelical insistence that artificial intelligence is not a side-show but the new organising principle of corporate strategy. Hyperscalers are throwing hundreds of billions at infrastructure; software and data-rich businesses are being snapped up as everyone tries to own a slice of the “stack” – from chips and data centres to vertical applications. Even in traditional sectors – energy, industrials, healthcare – assets are now being viewed through an AI lens: can they harness it, or will they be destroyed by it? That question is starting to move valuations.
Against that global backdrop, the UK sits in a characteristically awkward position: unloved, undervalued – and therefore unusually interesting! Bain’s data show UK strategic M&A market value up 38% in 2024 to around $133 billion, even though outbound deal value fell by almost a third.
In plainer English, more is happening onshore than offshore, and a lot of that is other people buying Britain. Our recent sale of West Horsley Dairy to Italy-based Granarolo S.p.A. is one such example.
UK-listed companies are widely seen as cheap relative to peers; that “London discount” has turned the market into something of a clearance sale for foreign strategics and private equity sponsors with a taste for “take-privates.”
Yet nobody should mistake this for an unalloyed vote of confidence in Britain plc. A recent report by Ansarada is quietly scathing about the policy backdrop: UK instability – fiscal zig-zags, Autumn Statement nerves, shifts in National Insurance – is singled out as one reason capital has been flowing towards more predictable regimes. In the words of one UK adviser, investors are essentially sitting on their hands waiting for the Treasury to stop moving the goalposts before committing fresh money, particularly into people-heavy businesses whose margins are acutely sensitive to payroll taxes.
Even so, there are pockets where the UK’s structural strengths shine through. The software and broader tech sector are described as resilient; British data, cyber and AI-adjacent assets remain in high demand from both strategics and sponsors hunting for “platforms that can scale in the cyber space” and niche channel partners that give them distribution into global vendors.
Family offices and ultra-high-net-worth investors are increasingly active in UK mid-market deals, especially in FMCG, infrastructure, professional services and healthcare and there is growing attention on female-led and female-centric businesses emerging from the start-up ecosystem.
So, how shall we reflect on 2025 for UK M&A? The honest answer is “busy, but bumpy.” Globally, the consensus from various financial commentators is that 2025 marks the first proper up-leg of this cycle: interest rates edging down, regulatory temperature cooling a notch, CEO confidence returning, cross-border flows – particularly between the US and Europe – picking up, and the number of $10 billion-plus transactions rising again after a fallow period.
The UK is set to be one of the main theatres where this plays out.
In the short term, expect more of the same: overseas bidders quietly stalking undervalued FTSE and mid-cap names; sponsors using “take-privates” to deploy capital at scale; continued consolidation in sectors where “buy and build” has become the norm – from business services and healthcare to software and specialist manufacturing. At the same time, corporate simplification will gather pace: spin-offs, divisional sales and regional carve-outs as boards try to unlock latent value and tell a clearer equity story to increasingly impatient investors.
Ultimately, the big swing factor is politics, not spreadsheets. If the UK can offer something that has been in short supply – a stable, predictable fiscal and regulatory regime, a planning system that doesn’t deter infrastructure and energy investment and a capital markets reform agenda that narrows the valuation gap with New York – then the country could move from being a bargain basement to a genuine growth hub within this global M&A upswing.
To discuss what these 2025 reflections could mean for your potential exit, contact us now for a confidential appraisal.
Tags: 2025, M&A, Reflections
