Signs of resilience despite shift in confidence   

Reflecting on the M&A market in 2025

2025 has been a year of contrasts for the M&A market. Whilst transactions have continued to get across the line, confidence has shifted, especially in the final quarter. Buyers are becoming more selective and strategic, while owners are taking a more measured approach to timing and valuation. We have seen several themes emerge in 2025 that will shape how the market moves as we head into 2026.

The Budget pause

The run-up to the November Budget created a noticeable slowdown. Many business owners hit pause, waiting for clarity on potential tax changes. This delayed several planned launches until early 2026, creating a short-term dip in pipelines. The good news though is that interest is building again as the tax policy environment feels more settled (for now).

Unsolicited trade approaches on the rise

The standout trend in 2025 has been the sharp increase in unsolicited trade approaches. Many of our recent projects started with a direct enquiry from a strategic buyer. Some of these conversations led to off-market deals; others have encouraged our clients to run a broader process. Trade buyers with strong balance sheets and a clear strategic need have been a major driver of M&A activity this year.

Sector highlights

Certain sectors continue to shine. Cyber and IT remain hot, driven by investment in digital resilience and automation. Healthcare is busy thanks to reliable earnings and demographic demand. Education and training businesses are attracting interest too, as companies focus on workforce skills and reskilling. These areas have delivered steadier deal flow than many commentators expected providing consistent deal flow opportunities.

Succession and MBOs

We’ve seen more management buyouts (MBOs) as owners plan retirement or phased exits. Management-led solutions protect culture and continuity, and banks have been supportive where cash generation is strong. We have continued to see specialist lenders stepping in to fill structural gaps, keeping this exit route as popular as ever.

EOTs – a changing landscape

November’s shock Budget shift in the favourable CGT rate for Employee Ownership Trusts (EOTs) has changed the equation for some owners. Those previously drawn to the economic advantages of an EOT are reassessing. Our sense is that interest will remain strong, among owners highly motivated by cultural legacy and employee engagement rather than pure financial optimisation, but the unexpected CGT rate change may lead to an overall fall in the popularity of EOTs in 2026.

Private Equity – slower but steady

Private equity activity has been steady, but not fast-paced. Funds still face pressure to deploy capital, yet valuation gaps and tighter lending conditions have slowed commitments. Bolt-on acquisitions remain the most active area, often moving faster than new platform investments. Well-prepared, cash-generative companies with a clear growth plan are still attracting interest — but deals are taking longer, with investors structuring transactions more carefully.

Looking ahead to 2026

As always there’s good reasons to remain positive. Policy clarity, active trade buyers, and a more stable debt market should support stronger deal flow. Headwinds do remain though — borrowing costs, wage pressures, and geopolitical concerns—but well-positioned businesses with reliable earnings and a clear strategy will always attract attention. For owners planning an exit, early preparation, realistic expectations, and a structured approach will always be key.