As we discussed in our 2025 MHA Global Transaction Report, which can be found here we explained how the global transactions market 2024 was defined by ongoing uncertainty. This was driven by geopolitical unrest and sluggish economic growth on a global scale. However, there were signs of cautious optimism in many parts of the world.
During the first half of 2025, similar themes have been at pay. We have witnessed falling interest rates in many markets, because of falling inflation. However, ours and many others, prediction that the Trump administration would drive a stronger USD, has not occurred, in fact the opposite. We have witnessed the USD weaken in the first half of 2025, because of US tariffs and the knock-on effect globally. In January 2025, one US dollar converted to approximately 82p. In the second week of May, this had fallen to 75p, a decrease of 8.5%, or in other words, UK assets are in theory 8.5% more expense now, compared to five months ago, for US investors, unless the rate had been hedged.
At MHA we focus on mid-market domestic and cross border transactions. So, what are we seeing in mid-market M&A activity here in the UK, both domestically and inbound from overseas investors.
Outlook for UK mid-market M&A in 2025
We have seen the UK domestic mid-market M&A landscape gaining traction in 2025, following a period of economic uncertainty. With both strategic buyers and private equity firms returning to the fold, the landscape is shifting toward renewed deal activity.
Emerging trends in mid-market M&A
- Strategic buyers raising the bar Acquirers are seeking businesses with strong market positioning, technological integration, and well-defined environmental, social, and governance (ESG) credentials. The focus is on companies that can demonstrate resilience and long-term growth potential.
- Private equity’s buy-and-build momentum Armed with substantial capital, private equity firms continue to prioritise industries offering stable revenue streams. Sectors such as technology, software, media, IT services, consultancy, professional services, business services, healthcare and life sciences remain hot spots for buy-and-build strategies, fostering expansion and consolidation.
- Cross-border investment surge Despite the weakening US dollar, the UK remains a magnet for international investors, including the Middle East, Asia Pacific, Europe and North America. The narrowing gap between buyer and seller expectations has further accelerated cross-border transactions.
- Sector-specific opportunities Business services, manufacturing, food and beverage, and software are attracting investor interest due to their ability to navigate economic cycles effectively. These sectors provide strong foundations for mid-market dealmaking.
Challenges and considerations
While optimism surrounds mid-market M&A, dealmakers face hurdles such as intensified due diligence, regulatory shifts, and evolving ESG requirements. Sellers must be proactive in addressing these complexities to streamline transactions.
Despite the weakening US dollar, the UK remains a magnet for international investors, including the Middle East, Asia Pacific, Europe and North America. The narrowing gap between buyer and seller expectations has further accelerated cross-border transactions.
While optimism surrounds mid-market M&A, dealmakers face hurdles such as intensified due diligence, regulatory shifts, and evolving ESG requirements. Sellers must be proactive in addressing these complexities to streamline transactions.
The UK mid-market M&A sector is on track for a dynamic year, with strategic buyers and private equity firms driving transactions. Companies that embrace innovation, ESG principles, and adaptability will be well-positioned to capitalise on emerging opportunities.
The outlook for cross-border M&A in the UK in 2025
As we move further into 2025, the UK’s cross-border M&A landscape is showing signs of resilience despite ongoing economic and geopolitical uncertainties. Dealmakers remain optimistic, with the UK ranked as the second most attractive market for cross-border transactions.
Key trends driving activity
While the UK’s economic recovery in 2024 was slower than expected, inflation and interest rates have begun to stabilise, creating a more favourable environment for dealmaking. The Bank of England’s cautious approach to rate cuts suggests that further reductions will be gradual, but the appetite for M&A remains strong.
Certain industries are expected to lead the way in cross-border M&A. The automotive, transport & logistics sector alongside technology, media, and communications (TMC) sector are projected to see the most deal activity through to 2030, followed by energy & infrastructure and life sciences & healthcare. The AI boom and demand for advanced technologies are fuelling acquisitions in the tech space and the cross-border nature of transport and logistics innovation.
Private equity firms continue to hold vast sums of unused capital, driving strategic acquisitions. The UK’s M&A market saw a significant increase in inbound deals in 2024, with transactions involving UK companies reaching approximately £261 billion—up by a third compared to 2023. This trend has continued into the first half of 2025.
Challenges to watch
As discussed earlier, tariffs introduced in early April have raised concerns among dealmakers, but confidence in UK M&A remains high. However, we have witnessed firsthand, that US dealmakers are being more cautious at opportunities they are considering and ensuring that due diligence, particularly financial, is extended to ensure the financial metrics their investment thesis is based on, remain true, or not.
A critical blind spot in cross-border transactions, with 63% of dealmakers identifying integration as a key challenge.
Navigating evolving frameworks will be crucial for ensuring the success of large-scale deals.
Conclusion
The UK mid-market M&A sector is on track for a dynamic year, with strategic buyers and private equity firms driving transactions. Companies that embrace innovation, ESG principles, and adaptability will be well-positioned to capitalise on emerging opportunities.
Regarding US M&A investment in the UK, Trump's tariffs have added complexity to the global economic environment, leading to a slowdown in M&A activity. The tariffs have caused market volatility, which can be particularly challenging for lower midmarket companies. This uncertainty has led to delays and hesitations in M&A transactions, as potential buyers and sellers adopt a wait-and-see approach. Additionally, the increased costs of imported goods and materials have squeezed profit margins, leading to lower valuations and cautious investment strategies.
Despite these challenges, there are opportunities for strategic acquisitions. Companies that can adapt to the new trade environment and mitigate the impact of tariffs may become attractive targets for acquisition. Distressed sales due to economic disruptions may also present opportunities for well-capitalized buyers to acquire valuable assets at a discount.
Despite the hurdles mentioned previously, the outlook for cross-border M&A in the UK remains positive, with international dealmakers also poised to capitalise on emerging opportunities. As businesses adapt to shifting market conditions, strategic acquisitions will continue to shape the UK’s corporate landscape.
View our related insights
How will President Trump's global tariffs impact UK businesses?
Read more
Economic Outlook for 2025: Navigating uncertainty and opportunity
Read more
What happened in 2024 from a lending and funding perspective?
Read more
