London’s financial circles are buzzing with deal activity, as overseas buyers and private equity firms circle UK-listed companies like bargain hunters at a summer sale. While headlines warn of an exodus from London’s public markets, savvy investors see a different story: a golden window for strategic acquisitions.
The numbers speak volumes. Already this year, 30 UK companies with market values over £100 million have received takeover bids, according to Peel Hunt’s Charles Hall. The FTSE 250, home to Britain’s mid-sized firms, trades at a 20-year low relative to its large-cap sibling, with its price-to-earnings ratio languishing at just 10.8x. For business buyers, this isn’t a crisis, it’s an opportunity.
The Buyers’ Market
Bargain basement valuations
UK mid-caps have become the overlooked source of opportunity on the global markets. While the FTSE 100 hit record highs this year, its smaller cousins trade at fire-sale prices. The average FTSE 250 company now changes hands at a 40-50 per cent discount to analysts’ fair value estimates, with high-growth sectors such as tech and healthcare particularly oversold.
JP Morgan’s Georgina Brittain notes: “The UK mid-cap premium has completely disappeared.” In other words, quality businesses are being priced like distressed assets. To give just one example, nanopore sequencing firm Oxford Nanopore, whose groundbreaking DNA tech is trading 80 per cent below 2021 highs, despite analysts seeing 69 per cent upside.
The transatlantic shopping spree
As has often been the case over recent years, American buyers are leading the charge, accounting for 47 per cent of 2025’s deal volume so far. Recent coups include Qualcomm’s $2.4 billion (approx. £1.8bn) grab for chip designer Alphawave IP and Advent International’s £3.7 billion move for Spectris. However, it’s not just tech that’s attracting US buyers, with everything from manufacturers to marketing firms finding themselves Transatlantic targets.
Private equity’s playbook is clear
For private equity firms targeting UK companies, the plan of action is simple. Firstly, snap up undervalued UK businesses to act as platform companies (ideally within high-growth, fragmented industries with strong recurring revenues), initiate a roll-up strategy that targets acquisitions of industry competitors and bolt-ons of smaller firms. Finally exiting via a highly profitable trade sale or listing (or relisting) the expanded business at a higher global multiple.
As Translink’s Declan Savage explains: “Buy-and-build creates scaled players that command premium valuations.” With UK targets cheaper than US/European peers, the fundamental numbers are highly attractive, even before you come to the potential synergies.
The Buy-and-Build Bonanza
Case Study: From local hero to global player
The story of Yorkshire transport software firm Mandata is one for buyers to take note of. The company is a well-established operator in an extremely high-growth industry that sits at the confluence of two major sectors: software and logistics.
In 2018, the company secured backing from private equity firm LDC. In late 2020, the firm acquired Stirling Solutions, forming the Mandata Group. Following this, the group expanded into Europe.
Today, the Mandata Group serves around 8,000 logistics companies worldwide and is a far more high-value proposition than when LDC first invested. This demonstrates the blueprint for private equity buyers and platform companies: buy niche operators, integrate their tech, and cross-sell to combined client bases.
Find out more about acquisitive growth strategies:
The BSR guide to roll-up business acquisition strategy
An in-depth look at the Corporate Compounder M&A model
Sector Spotlight: Deal Hotspots
Healthcare: Fragmented clinics and medtech firms ripe for consolidation
Find out more about this industry:
MedTech M&A: Resilience and Optimism
Care in the community: M&A in the healthcare services market
Tech: UK’s AI/cybersecurity startups at half the valuation of Silicon Valley peers
Find out more about tech M&A:
Automation: Poised to transform UK industries
Business Services: Marketing, HR and logistics firms with sticky client relationships
Find out more about business services M&A:
UK recruitment M&A 2025: Strong activity in a resilient market
What’s behind the growing M&A market for UK professional services firms?
As Connection Capital’s Selina Kavanagh notes: “The UK’s SME ecosystem offers perfect buy-and-build terrain – if you know where to look.”
The Flipside: ‘Undervaluation’
Yes, constant takeover bids shrink London’s market depth. Yes, pension funds’ 42-month exodus from UK equities needs addressing. But for buyers with dry powder, this dislocation creates once-in-a-decade opportunities:
Lower entry multiples: Average bid premiums of 45 per cent still leave room for upside
Easier integration: Many targets have streamlined ops post-Brexit
Currency play: Sterling’s stability vs dollar volatility
Dunedin Income’s Rebecca Maclean: “UK mid-caps offer growth at value prices. The valuation gap can’t persist forever.”
The Road Ahead
While policymakers debate market reforms, the M&A train keeps rolling. For business buyers, the calculus is simple:
Identify sector leaders trading below replacement cost
Acquire using cheap debt (base rate: 4.5 per cent vs 2022’s 5.25 per cent)
Integrate operations/cut overlaps
Exit via transatlantic sale or IPO
As Bain & Co’s 2024 PE report highlights: “Buy-and-build remains the surest path to 20%+ IRRs in uncertain markets.”
All this comes down to a basic call to action for UK dealmakers: don’t mourn London’s shrinking markets, mine them. With many UK equities priced at sub-par levels but with fundamentals intact, today’s undervalued asset could be tomorrow’s crown jewel.
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LEASEHOLD
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