M&A and PE Market Trends Report 2025

This is the ninth year we’ve published a report on UK M&A and private equity deal markets. The key objective for our report has been to identify specific trends within our transaction data that indicate whether market conditions are more favourable to buyers or sellers, and is often largely governed by the prevailing economic sentiment and market demand. Last year, however, we found the market to be

somewhat akin to the British weather: changeable and unpredictable. Though given that over the last decade we’ve had Brexit, a pandemic, an energy crisis, war in eastern Europe, inflation, and higher interest rates, perhaps it is unsurprising to see the market struggle to coalesce around what may be ‘normal’ or even the ‘new normal’. Transaction volumes ebbed and flowed from quarter to quarter and while the UK election and the change of Government spurred sellers into action ahead of the Autumn Budget and with fears of a sizeable increase in the effective rate of Capital Gains Tax, the final quarter slowed a little, perhaps as a consequence of the economic levers pulled by the Chancellor to generate elusive growth.

We saw a slight drop in the number of private equity deals executed, and an increase in trade/strategic transactions, though the trade figures naturally include bolt-on acquisitions by private equity-strategic buyers which, for a while now, have been very much part of the M&A landscape. For future reports we are considering the value of segmenting these kinds of transactions to understand what’s market for buyouts, for strategic trade to trade transactions and for PE backed bolt-on M&A. Our sense is the latter type of transaction blends elements of both traditional PE and standard trade M&A deal terms resulting in something of a hybrid between the two and can lead to results that may be difficult to explain by looking at historic data trends. For example, while private equity clearly favours locked box transactions on buyouts, there is a tendency, once they become a strategic buyer (via their portfolio companies) to use more buyer friendly completion accounts and deferred consideration mechanisms like the larger strategic corporates often prefer to do. Equally, we are seeing a trend of lower liability caps for warranty claims as more strategic buyers are getting comfortable with warranty and indemnity insurance products for their transactions – could this be the increasing influence of trade backed private equity owners perhaps?

Both confirmed by the data and anecdotally, deals took slightly longer to close, we saw longer deferred consideration periods, longer non-competes for restrictive covenants and an increased use of MAC clauses, all arguably reflective of the uncertainties seen across the market. These uncertainties resulted in some friction or at least a greater appetite for ‘arm wrestling’ between buyers and sellers and would, on the face of it, indicate a buyers’ market. However, there was a reduction in the number of deals where exclusivity was granted, indicating an environment more favourable to sellers, but could also be due to buyers sensing they might be the only interested party, bidding just enough to keep sellers interested in pursuing negotiations and therefore both parties, perhaps reluctantly, ‘playing the game’ to see if a deal can be done. To cloud matters further, as was seen during Covid-era M&A, some transactions were executed without exclusivity being granted where conviction bidders are prepared to incur adviser fees early and pre-empt highly competitive auction processes for certain types of assets, usually in sectors that are perhaps more sheltered from wider economic uncertainty. These instances were of course fewer in number compared to the heady days of late 2020 and 2021.

For buyers, continued market uncertainty meant deals were taking longer to close with buyers pushing for increased due diligence, capitalising on those opportunities where there may be reduced bidder appetite. We have seen potential buyers triaging early and deciding whether or not to proceed based on their competitive angle (or lack of it). With these buyers prepared to walk away earlier this sometimes meant the competitive dynamics changed as the process went on and to some extent favoured bidders with the most staying power and, at times, leaving sellers with fewer options than they thought or hoped they might have at the outset.

On the W&I side we’re seeing increased uptake as a consequence of both the market maturing and the increasing number of specialists offering cover. There has also been a clear trend for cover offered at higher insurance limits. No report on deal trends can be complete without mention of artificial intelligence, and while AI was not a primary driver of demand for investors last year, the use of AI is gathering pace across the machinery of deal making from assisting with efficiencies in the legal due diligence process (for example, contract reviews) to gaining underwriting insights in W&I markets. While investors are alive to the possibilities, the pace of change and clarity as to the return on investment for AI assets are, if anything, further complicating the due diligence process.

Emerging downside risk considerations are inevitable around the potential impact of tariffs and trade wars with some evidence that terms of W&I cover are already being considered to address this. However, with almost weekly changes in US tariff policy, it remains to be seen whether tariff concerns become a prominent feature of the market.

We are also seeing an increase in public to private transactions in the first two months of 2025 where listed assets are taken private either by private equity backed newcos or strategic buyers. This was expected given the relative political stability following the completion of 2024’s significant election cycle, greater predictability of interest rates and the broad and deep trend of continuing month-on-month outflows from public market funds (a trend which is exacerbated by take privates). It is unclear at the time of writing what impact (if any) US tariff policy will have.

In terms of exits, despite some green shoots in European equity capital markets, it would seem IPO exits are not a top priority for mid-cap companies, though still a consideration for larger cap companies. We note the relative paucity of IPO exits has acted to reduce some liquidity and transactional activity at the top end of the market. Looking forward it may be a pivotal year for European equity capital markets, and the UK market in particular, given the high number of companies exiting via acquisition or change of investment exchange. As we write, European equity markets are on a strong run – so we live in hope!