As shared by Nick Hague, Associate Director and Head of M&A and Corporate Development
Earlier this month, I attended the Mergermarket M&A Conference in London, joining many private equity investors and corporate acquirers to hear about trends and what to expect in the coming months. Many of the discussions reflected that we are seeing a maturing M&A landscape in the UK and Europe. Post-pandemic and post-inflation, the focus has shifted decisively toward strategic, value-driven activity, with corporates leading much of the momentum. Many of the speakers noted that PE and corporates alike are increasingly looking at value creation within their portfolios to drive growth via organic means.
A few more of the themes that were covered shed light on what we might expect to see in the short term:
Private equity: selective, slower and value-focused
PE activity started strong in 2024 but has since slowed. While valuations remain stable, deal flow has thinned and firms are increasingly focused on portfolio optimisation and operational improvement. Exit activity is subdued, with quality assets in demand but mid-tier assets harder to shift – especially those acquired at peak 2021 valuations. Strategic trade exits are gaining favour.
Longer holds and non-core disposals
The traditional five-year PE cycle is fading as firms adopt longer hold strategies and focus on deeper value creation. Non-core disposals are on the rise and firms are investing more time in understanding targets ahead of banker involvement to ensure the quality of acquired assets.
UK: quieter but attractive
Deal volume in the UK is lower than in continental Europe, but its fragmented market structure and stabilising rates make it appealing. Active sectors in the UK include defence, education, tech, legal services and financial institutions. PE interest in UK-listed companies remains strong, despite challenges with expensive take-privates. Confidence in public markets is buoyed by HG-backed Visma’s planned LSE listing.
Financing: favourable but cautious
Debt is available and flexible, yet many are de-leveraging pre-deal and re-leveraging later, especially for buy-and-build strategies. On the LP side, co-investments have slowed as investors await distributions, adding to market caution.
AI, naturally
AI has been increasingly used across the deal lifecycle in recent months: in due diligence, cultural profiling and post-merger integration. While still very much requiring human oversight, it’s improving efficiency. SoftBank’s use of AI in acquiring Arm almost a decade ago set an early benchmark for its potential, with acquirers increasingly embracing AI to analyse large data sets, flagging key issues and trends and for data scrubbing to assess cultural alignment of targets.
Challenges and opportunities
Risk appetite has tempered, but investors are more strategic and confident. Underperforming or misaligned assets are now seen as turnaround opportunities, with top tier assets clearly still trading. GPs face tough choices on whether to exit underwater positions to aid liquidity or hold for the forecasted returns, with the general consensus being to hold to realise the exit valuations sought at point of investment.
International outlook
Investment from Canada and China into Europe is expected to grow as investors diversify beyond the U.S. Alternative structures – permanent capital, co-investments and longer-hold models – are gaining traction, offering flexibility and quicker returns.
In summary, M&A in 2025 is about recalibration. Capital remains available, but returns are harder won. Strategic alignment, operational rigour and cultural fit are paramount. Volume may be down, but deal quality – and scrutiny – are at an all-time high. The next wave of value will come from disciplined, intelligent execution, with the overriding sentiment being the M&A market is poised to make a strong come back in 2026.