Jo Davenport
Partner, Transaction Services
2025 review
The 2025 UK consumer and leisure M&A market was characterised by a subdued yet evolving environment, shaped by a range of macroeconomic factors. Several key themes emerged that are influencing the strategic decisions of investors and acquirers:
Consumer Confidence and High Street Challenges
Consumer confidence remained weak throughout the year, significantly impacting deal activity and sector valuations. This was exacerbated by broader high street challenges like weakened discretionary spending and elevated operating costs. These factors collectively contributed to a cautious approach among investors, with many opting to delay transactions until market conditions stabilise.
Impact of US Tariffs
The imposition of elevated US tariffs during the year further complicated the landscape for international brands, affecting supply chains, compressing margins, and reducing export competitiveness. As businesses worked to mitigate these changes, some transactions were postponed, reflecting the need for strategic recalibration in response to shifting trade policies.
Strategic Acquirers vs. Private Equity
In this environment, strategic acquirers have taken the lead, focusing on consolidation, market expansion, and portfolio strengthening. Notable transactions, such as Flight Centre’s acquisition of Iglu and Tour Partner Group’s acquisition of Vision of Scandinavia, highlight the strategic intent to bolster market positions and enhance offerings. Private equity has remained cautious, with uncertain valuations and macroeconomic headwinds tempering their activity.
Resilient Sub-sectors Attracting Interest
Despite the overall slowdown, certain consumer sub-sectors have demonstrated resilience, attracting interest from private equity investors. Health, wellness, and pet care have emerged as areas of focus as investors seek assets that can withstand economic uncertainty and offer stable growth prospects.
Leisure and Hospitality Momentum
The leisure and hospitality sector has shown cautious momentum, buoyed by renewed consumer appetite for experiences. Increased activity in travel and tourism segments highlights the strategic importance of experiential offerings, despite investors navigating broader economic challenges.
Extended Deal Timelines
The consistent cycle of uncertainty has impacted consumer sentiment heavily, often affecting the pace of M&A activity in the consumer markets sector. As a result, we are observing extended timelines for deals, reflecting the more cautious approach by investors. Valuation gaps continue to pose a persistent hurdle, necessitating thorough due diligence and strategic planning.
2026 outlook
As we move forward, the UK consumer M&A market will continue to be shaped by these dynamics. Investors and acquirers must remain vigilant, adapting to evolving conditions while seeking opportunities in resilient and differentiated assets.
