I think we’re starting 2025 with a lot more certainty than we had in 2024. With the US and UK elections out of the way, and clarity over the budget, we have a lot more stability than we’ve enjoyed in recent years. Of course, some of the announced tax changes will inevitably mean higher costs for businesses, making it harder for them to grow organically, and this will likely mean M&A is the avenue of choice for a lot of companies to fuel their growth going forward. We’re hopeful interest rates will continue to fall and with increased clarity over tax levels, I’m optimistic for a fruitful year in M&A. 

Late last year there was a lot of positive sentiment that the M&A industry would enjoy a very robust 2025, although I’m not sure we’re out of the woods yet. With fears around rising interest rates and inflation, it’s been a frustrating start to the year for many businesses although I’m confident that companies nimble and dynamic enough to adapt to changing circumstances can still see huge success. I think we can all accept that thorough due diligence is the new norm so we’re not likely to see deal timelines shrinking significantly. After the uncertainty of the past couple of years we really do have a lot more clarity now, and while it’s not necessarily going to be easy, there are still many fantastic deals to be done and plenty of opportunity for agile, innovative companies to do good business in the year ahead. 

I’m expecting to see the rebound the industry made in 2024 continue at a cautious pace. With many companies facing rising business costs there may not be the boom many have predicted, but I do think there’s a lot happening and a lot to look forward to. I think some of the trends we’ve seen in 2024 will indeed ramp up in 2025, with professional services firms looking to strategic M&A to maximise market reach and fill gaps in offering or geography. Similarly, with ongoing global conflicts, the defence and aerospace industries will see increased acquisition as larger companies look to buy in niche skills and innovative technologies to keep up with the pace of change. All in all I think we’re set for a good year, but one not without its challenges. 

In 2025, I expect UK M&A to continue to regain momentum, driven by improved borrowing conditions and a surge in mid-market private equity fundraising. The recovery in European IPO activity, coupled with a sustained focus on tech (and particularly AI) investment, should create fertile ground for deal-making and innovation-driven acquisitions. Of course, ongoing geopolitical tensions and economic uncertainties remain factors to watch closely, as they may temper investor confidence, and rising business costs could mean unexpected challenges for unprepared companies. 

A volatile US political environment will spill over into the UK, pressurising boards (particularly in consumer and public markets) who haven’t carved out a strong mandate into reactionary stances. Meanwhile short-term political noise will weaken the dollar reducing the valuation gap between Europe and the US, driving significant opportunity for European strategic M&A as capital markets shift where European firms are able to move quickly. As the year plays out, markets will adapt to the new political environment. In periods of stability, limited partners will renew pressure on private equity for distributions with less established platforms in particular needing to show cash returns. These forces will increase transaction volumes, while valuations tilt downwards in a buyers market. 

Given the significant commitments the new government has made around infrastructure, construction and ESG investment, I think this is going to be an exciting year for companies serving the public sector. Whether that’s people-driven businesses like consultancies and advisors, or sectors like construction that are going to be inherently involved in delivering large-scale projects, we’re likely to see deal activity increasing. Similarly, impending regulation around ESG and fast-approaching net-zero deadlines are going to mean companies with green credentials are going to become more sought after. 

I’m expecting to see the logical next steps of what we saw last year in terms of the Private Equity industry. Where careful acquisition choices were key in 2024, it’s now time for many PE houses to take an honest look at their portfolios and assess which businesses are ready for exit. Many of them have either had to hold platforms for longer than planned, or have holdings that haven’t yet hit their inflection point, due to the tough conditions over the last couple of years. Making strategic divestments or carve outs from portfolio businesses will allow them to realise cash for reinvestment into the platform, and create a clearer exit horizon for the remaining business, but they’ll need creative, personalised advice to make the most of it.   

I’m expecting 2025 to bring a continuing uptick in activity. The certainty of the budget, whether good or bad, provided some stimulus and I think we’ll continue to see increased deal volumes through 2025, especially with owner-managers looking to sell and large companies looking to flesh out their offerings. However, difficult business conditions, including rising taxes and higher wage costs, may make ideal Private Equity platforms harder to find and increase competition as a result. Towards the back end of the year I suspect we’ll see more first-round exits for PE, making the most of (conservatively) increasing valuations and global interest in the UK market. 

I’m expecting M&A levels to stabilise and become more consistent off the back of steadying interest rates, falling inflation, and the cost of capital evening out at a level acceptable for investors. This should have a positive impact on the quality of opportunities available in the market and would lead to more competitive processes driven by increasing appetite to deploy from institutional investors. As far as sectors go, I think there will be significant uptick in interest in niche service offerings and value attached to expertise, particularly in people-led businesses such as professional services, wealth management and consultancies.  

As a newcomer to the UK M&A industry I’m still getting to grips with the specific challenges and opportunities but I think we’ll see resilient economic growth now the political uncertainty is settled post-election. I’m expecting a lot of opportunity in a number of key sectors including tech, particularly AI, cybersecurity and data analytics, as big players look to buy in key capabilities. Healthcare continues to become a bigger focus with an increasingly aging population, and renewable energy is going to be ever-more important with the government’s net zero commitments, as well as increasing regulation requirements.