Quality over quantity: UK M&A volume slips but deal value climbs
UK merger and acquisition deal value increased last year despite a fall in volumes as investors turned their focus to acquiring fewer, higher-quality assets.
The total number of UK deals fell 12 per cent year on year to 2,991, down from 3,411 in 2024, according to the latest industry trends data from PwC.
But overall deal value increased by 12 per cent to £131bn, up from £117bn, after buyers became more selective in their purchases, while also being willing to pay more for premium assets.
In particular, investors scrambled to get their hands on digital and energy infrastructure assets, in a bid to both keep pace and benefit from the rapid scaling of AI.
Demand for data centres, cloud platforms and energy-intensive digital infrastructure underpinned some of the largest transactions last year, leading average deal size to rise by 28 per cent to £44m from £34m.
Lucy Stapleton, head of deals at PwC UK, said: “We would not usually expect deal values to rise so sharply when volumes are falling, which underlines how exceptional current market conditions are.
“After a difficult period for the UK deals market, 2025 marked a turning point.”
The stabilisation of interest rates coupled with inflation moving back towards its target led investor confidence to gradually return, creating “clear momentum” in the M&A pipeline, particularly from private credit and large global funds.
AI demand
Rising deal values also pushed the average deal size higher across most sectors, with the technology, media and telecommunications sector recording 590 transactions.
The financial services industry delivered several of the UK’s largest transactions, including major insurance and asset and wealth management transactions, as deal values jumped 44 per cent year on year.
Elsewhere, energy, utilities and resources reported valuations climbing to £18bn, despite lower volumes, in response to investors wanting to tap into national energy transition and infrastructure growth.
The government boost in support of the life science industry saw health industry transactions remain stable at 194, while consumer markets and industrials remained the most active in terms of volume, with 802 and 648 deals respectively.
PwC expects “to see more deals crossing the finish line in 2026” in response to companies building their investment portfolios in response to opportunities opening up across a range of sectors.
Capital concentration
The UK market was also increasingly shaped by the high concentration of capital held by the large global private equity funds, as well as the rapid expansion of private credit.
It has become the fastest-growing financing channel for large-cap transactions,as the industry continues to capitalise on banks pulling back on corporate lendings as well as the ability to offer more flexibility.
Stapleton said: “Outside the most structurally attractive areas, activity has been more reflective of the UK’s broader low‑growth environment.
“Buyers remain cautious, and assets require deeper preparation, clearer value‑creation plans and stronger proof of resilience before processes move forward.”