M&A activity in the UK slowed down by nearly a fifth during the first half of 2025, with dealmakers seemingly focusing on fewer, but more high-value transactions.
According to PwC’s latest Global M&A Industry Trends report, there were 1,478 UK M&A deals during H1 2025, a drop of 19.1 per cent compared to 1,828 in H1 2024, with PwC remarking that the figures reflected “a more selective market environment.”
Total disclosed deal value also fell, albeit less severely, dropping 12.3 per cent from £65.3 billion in the first half of 2024 to £57.3 billion during H1 2025.
However, while overall deal volume and value both contracted, average deal size (based on transactions with disclosed values) rose to £169.2 million, as dealmakers targeted fewer but more strategic acquisitions.
According to PwC, deal figures reflected resurgent confidence in high-value activity in sectors including Technology, Media and Telecommunications (TMT), Financial Services and Industrials and Services.
PwC’s research revealed that the increase in average deal size was driven by a surge in large-scale investments, with investors targeting resilient assets and long-term growth opportunities. The report adds that, despite caution persisting in certain areas of the market, strategic capital deployment is accelerating in areas with strong underlying conditions.
Commenting on the findings, PwC UK’s Global Head of Deals Lucy Stapleton said: “The UK M&A market in 2025 has been characterised by a sense of restrained momentum. There’s a strong pipeline of deals ready to go, but many remain paused due to ongoing volatility. That said, the fundamentals are encouraging as interest rates are easing, liquidity is improving, and equity markets are strong. We’re seeing a shift from passive optimism to active investment.”
“Investors are focusing on value creation, with a clear deal objective and a willingness to deploy capital into sectors where growth is critical, including technology, infrastructure, and energy. When confidence returns more broadly, we may see a sharp uptick in activity, and those who are prepared will be best placed to seize the opportunity.”
The most active sector for dealmaking during H1 2025, according to PwC data, was Industrials and Services, with 400 deals, more than half of which were in the business services sub-sector. Consumer Markets followed with 310 deals and TMT with 307 deals.
The top sector in terms of deal value was Financial Services, with a total disclosed deal value of £17 billion - primarily resulting from four deals of over £1 billion. TMT and Industrials and Services followed, both recording deal value of £10.8 billion.
PwC Partner Colin Smith commented: “Industry dynamics are playing a decisive role in shaping deal activity. We’re seeing strong momentum in sectors like financial services, where consolidation and digital transformation are driving high-value transactions. Meanwhile, industrial sectors continue to attract interest for their resilience and scalability. The data shows that investors are not just chasing growth but are targeting sectors where structural change is creating long-term opportunity.”
Looking ahead to the remainder of 2025, PwC say that the M&A market is poised for further growth, but that this may be contingent on macroeconomic stability and geopolitical uncertainties being resolved.
Despite these potential headwinds, however, the report states that current conditions indicate a stable environment for M&A, with strong capital availability and clear strategic imperatives among dealmakers.
Lucy Stapleton commented: “Key sectors continue to attract investment, driven by long-term strategic priorities and megatrends such as digital transformation, energy transition, and healthcare innovation. This isn’t just about operational improvement. It’s about generating real value by supporting management teams, investing in transformation, and understanding how assets fit into broader ecosystems.”
Find out more about the major effect that economic conditions have on business sale activity
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