August 2025

Global M&A Report – Q2 2025 update

For UK small and medium-sized business owners, the key headlines from Pitchbook’s latest Q2 2025’s Global M&A Report are clear: mergers and acquisitions activity remains robust despite wider economic uncertainty. Globally, the total value of deals increased significantly compared to the same period last year, driven largely by strong investor appetite for technology and resources businesses.

Notably, UK companies continue to attract substantial investment, particularly from North American buyers, due to favourable exchange rates and Europe’s comparatively lower interest rates. This trend means SMEs in attractive sectors—particularly technology, healthcare, and financial services—may find opportunities to achieve higher valuations from international buyers.

Corporate carveouts, where large companies sell off non-core business units, are increasing significantly in the UK market. This presents SMEs with opportunities either to acquire new assets or to position themselves as attractive targets for private equity investors looking to consolidate and grow businesses.

Importantly, valuations for smaller deals (under £100 million) remain stable, suggesting SMEs are maintaining their value in a cautious economic environment. However, the report urges businesses considering sales or acquisitions to prepare meticulously. This includes clarifying financial terms, obtaining accurate valuations and understanding regulatory impacts.

Despite a tricky global economic landscape, mergers and acquisitions (M&A) remained robust in the second quarter of 2025. Total global deals amounted to $988 billion, reflecting a 13.4% increase compared to the same period in 2024, across 12,605 transactions. While that’s a slight dip from the first quarter of the year, it’s impressive given current uncertainties around geopolitics, trade tensions, and recession risks.

Focusing specifically on the UK market, there’s been a notable surge in corporate carve-outs—businesses selling off parts of their operations to streamline or strengthen their balance sheets. This trend has been driven by heightened pressures from shareholders demanding more value, amid ongoing economic uncertainty. Notable examples include healthcare giant Mallinckrodt Pharmaceuticals’ sale of Therakos to CVC and Reckitt’s multibillion-pound spin-off of its homecare brands.

Interestingly, UK and European companies have been outspending their American counterparts in cross-border deals. UK and European buyers injected $113.2 billion into North American targets, significantly ahead of the $92.5 billion invested by US buyers into Europe. However, American firms struck more deals, underscoring a distinct trend: Europe is writing larger cheques, but the US is signing more deals overall.

Particularly impactful for UK firms has been the European Central Bank’s (ECB) decision to cut interest rates twice in the quarter, a stark contrast to the US Federal Reserve’s cautious stance. The cheaper borrowing costs have created a favourable backdrop for UK and European companies keen on acquisitions.

Valuations of companies being bought and sold have stabilised to around pre-pandemic norms.
The UK’s deal-making community has also seen a marked increase in demand for warranty and indemnity (W&I) insurance to cover carve-outs and complex transactions. Such insurance, which protects buyers from unforeseen liabilities, has become a growing feature of the UK M&A landscape as transactions grow increasingly intricate.

Looking ahead, the report anticipates continued strong interest in carve-outs, particularly as companies remain under pressure to demonstrate value and reduce complexity. However, the deal landscape remains nuanced. Industries such as Information Technology (IT) and Materials have shown significant momentum, while Healthcare and Energy sectors lagged due to heightened caution and market volatility.

Summary M&A Q2 2025

In summary, the UK M&A scene in Q2 2025 has proven resilient, buoyed by strategic divestitures and advantageous borrowing conditions in Europe. While uncertainties persist, particularly with global trade tensions, the appetite for deals among UK businesses remains notably robust.

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Tags: Global, higher valuations, investor appetite, M&A report, opportunities, PitchBook, prepare, Q2 2025, regulatory, resources, Technology, Valuation