As we reach the midpoint of 2025, the M&A market presents a complex picture shaped by geopolitical tensions, sector-specific dynamics and evolving funding landscapes. This overview draws on insights from key deals stakeholders within our firm, offering perspectives of the transactions market and highlighting themes and sectors that have defined the first half of the year.
The geopolitical environment continues to cast a shadow over the M&A landscape. Ongoing global and regional conflicts have introduced a layer of uncertainty that businesses must navigate. In addition, the impact of US tariffs has been a factor, albeit with differing influence depending on sector exposure and level of cross-border trade. Despite these challenges, the market has shown continued resilience, with transactions continuing albeit at a relatively cautious pace and only a modest uptick in distressed activity. Link to BDO transactions for H1, and our deals matrix here.
Preparation and readiness remain crucial themes for businesses looking to engage in M&A activities. Well-prepared, high quality businesses are commanding strong valuations, even achieving price premiums, and with proper process management can result in swift deal execution. While this may sound like a repeated theme, the importance of thorough due diligence cannot be overstated, as stakeholders are increasingly focused on validating business fundamentals and understanding market dynamics. Additionally, the role of datacubes in providing a clearer picture of business operations and potential risks continues and is increasingly adopted by companies as part of standard business operations, not solely to inform a transaction process.
Several sectors have shown notable activity levels and in many instances sustained resilience. Life sciences has seen a strong start to the year with multiple deals completed, driven by ongoing innovation and demand. Leisure has also performed well, benefiting in certain sub-sectors from sustained post-pandemic recovery trends. Defence stocks have gained attention, reflecting a shift in investment sentiment for some, whilst acknowledging ESG considerations.
Tech services and software businesses delivering mission-critical services and offering highly visible revenues remain highly attractive acquisition opportunities for both trade and PE. Professional services, particularly accountancy and legal firms, have seen significant transaction activity, a trend mirrored in the US market, as the potential for further consolidation and efficiency improvements remains.
The funding landscape is evolving, with private equity playing a pivotal role in driving transaction numbers. Continuation funds have become more prevalent, offering liquidity events for existing PE funds when traditional exits are challenging or in particular where there is perceived further value in maintaining support for the business through its next stage of growth. We have also seen pent up demand from credit funds which has resulted in them competing to deploy capital and hence creating a borrower-friendly environment.
UK capital markets have continued to face challenges during 2025, with subdued levels of IPO activity. During the first six months of 2025 there were ten new company issues on the Main Market and a similar number on AIM, lower than the number of company cancellations, leading to a net decrease in the number of companies on both exchanges. There has been a recent trend of companies stepping up from AIM to the Main Market.
International deals have seen a shift in dynamics, influenced by tariff discussions and geopolitical pressures. PE funds have increasingly been looking to Europe for opportunities and BDO has been able to support via offices across Europe. Similarly, Asian buyers have increasingly been looking to Europe given challenges in local markets and investing in the US given the current political climate. While the volume of cross-border transactions may have decreased, there is a growing awareness of the need to engage with US buyers and adapt to changing global market conditions. In these instances, the importance of having the right advisors to navigate these complexities and make the right introductions is paramount.
As we look ahead to the second half of 2025, businesses should focus on:
The M&A market in the first half of 2025 has demonstrated resilience in the face of geopolitical challenges and evolving sector dynamics, albeit this has resulted in some causal impact on wider deal activity momentum. By continuing to focus on readiness, sector-specific strategies and adapting to funding trends, you can position your business for success in the months ahead.
BDO completed on 89 deals with a total value of £4.3bn in the first half of 2025, representing an average size of £48m. Private equity-related deals accounted for 62% of these. To view our deals by sector, follow the links in each sector tile from our deal matrix below. Alternatively, click the link below to view all our disclosable deals for H1 2025:
Discover our comprehensive guide to the 2024 trends and shifts in M&A activity in key economic sectors. You can find out more about emerging market opportunities, trends, and predictions for 2025, including our PE trends for 2025.
