Bigger bets, sharper choices: The new shape of UK M&A

Quality has replaced volume as the defining M&A metric

Economically, conditions mainly stabilised over the year: inflation eased, interest rates became more predictable and available capital increased. But the deals market presents a complex picture, and activity is not evenly spread. Further, volatility has clearly not been eliminated, particularly where geopolitics are involved.

The first half of the story, which saw UK deal volumes dropping by 12% during 2025, is most easily explainable, mirroring the low growth and relative lack of confidence across the wider economy, as evidenced in our 2026 CEO Survey, which showed a significant weakness in CEO confidence.

However, at the same time, total UK deal values rose by 12% and the average deal size surged by 28%: where investors took the plunge, they often went from the highest board.

Major deals were driven by the opportunities presented by developments in AI and other technologies and underpinning infrastructure, as well as market disruption and consolidation in financial and professional services. Over the course of the year, we saw confidence building around a distinct set of high-quality assets demonstrating growth and/or resilience.

Conviction and capital are driving bigger, faster decisions

Megadeals and a global M&A reset

The global M&A market has split into a clear K‑shape, with momentum and value surging at the top end, while volumes elsewhere have decreased. This divergence is reshaping how capital flows, how dealmakers prioritise opportunities and where confidence is returning most strongly.

Global M&A deal volumes and values (2019-2025e)

^{Note: To improve comparability between periods, the data for 2025e includes a PwC estimate to capture a reporting lag. (Sources: LSEG and PwC analysis)}

Forces powering this premium‑end surge include:

• Capital concentration, with more capital is flowing into fewer, larger, higher‑conviction deals,
• The first wave of the AI investment super-cycle: with trillions of dollars required for data centres, computing, core components, infrastructure and energy to support AI scale‑up,
• Strategic selection: buyers are prioritising assets that underpin long‑term strategic repositioning, resilience and future growth.

AI and transformation are the primary value catalysts

The more significant shift is how buyers are using deals to reshape and streamline portfolios, accelerate AI-enabled transformation, and build or defend contracted ecosystems and platform positions.

Megadeals boost confidence, but they will not restart dealmaking everywhere. What matters more is why buyers are doing deals. Increasingly, they are using acquisitions to simplify their businesses, speed up AI adoption, and strengthen their market positions. This shift is changing the M&A landscape well beyond the largest transactions.

This ‘reset’ appears to lay the ground for the global M&A market: a concentration of capital towards more focused investors, and fewer deals but larger ticket-sizes as the scale-up of the AI economy gathers pace. 

Capital is concentrating into strategic ecosystems

The UK market in this global picture

Within this global reset, the UK is following the same broad pattern of lower volumes and higher values, but with its own distinctive profile.

UK deal volumes fell by 12% to 2,991, while total deal value rose by 12% to £131bn, pushing the average deal size up by 28% from £34.2m to £43.7m. Buyers have become more selective; they are willing to pay for assets with differentiated technology, data or infrastructure capabilities, but are much more reluctant when the quality and/or resilience is uncertain. If you strip out the megadeals, however and the underlying picture is one of a flat market, consistent with the broader trajectory of the UK economy, which has muted growth and persistent uncertainty over the period. The alignment between deal activity and macroeconomic conditions underscore the extent to which M&A volumes remain tied to business confidence, interest rate expectations and the availability of credit.

The UK is not simply a scaled-down version of the US. Its international financial and professional services ecosystem, together with strengths in technology, energy transition and data-rich platforms, is creating its own pattern of deals.

Capital concentration is also changing the landscape, leading to fewer but bigger buyers. The market is increasingly shaped by large global private equity funds and the rapid expansion of private credit, which means faster and more flexible financing but brings with it heightened risk and greater regulatory scrutiny.

Behind the scenes, deal preparation activity increased notably throughout the year, with both corporates and PE houses focused on sharpening investment theses and preparing assets for sale, rather than rushing into market uncertainty and potential process failure. We expect to see many of these assets finally transact as we move through 2026, as this ecosystem effect continues to shape how UK M&A develops.

UK deal volumes and values, 2019–2025e

The sectors commanding investor attention

While investors across the UK are pursuing resilient, growth-oriented assets in every sector, deal activity is gravitating towards a core set of high-value themes.

• Technology and data‑rich platforms: The technology, media and telecommunications sector saw fewer deals (590, down from 741 in 2024) but a 16% increase in value to £19.8bn, with premium assets achieving multiples well-above historical norms. These are typically businesses with defensible data, scalable platforms and the ability to harness AI in ways that change the competitive landscape. Notable transactions include Thoma Bravo's c.£4.3bn acquisition of Darktrace, a UK-headquartered cybersecurity company that uses AI and machine learning for threat detection and Informa's £1.2bn acquisition of Ascential, bringing together two UK-headquartered businesses to create a combined data and analytics platform serving the events and business intelligence markets.
• Energy transition and infrastructure: In energy, utilities and resources, deal value climbed to £18bn despite modestly lower volumes, reflecting investors’ focus on energy transition, infrastructure resilience and long‑term contracted cashflows. This included the largest UK deal of the year. This included the largest UK deal of the year - the £15.2bn merger between Anglo American and Teck Resources - as well as Harbour Energy's £9bn acquisition of Wintershall Dea's upstream assets and European carbon capture and storage licences.
• Financial and professional services as ecosystem anchors: Financial services, a hotbed of business model transformation-delivered three of the five largest UK deals in 2025, including Jupiter's acquisition of CCLA and Athora's deal with PIC Group. Sector deal value rose 44% year-on-year, accounting for 42% of total UK activity. Professional services was equally active, with Bridgepoint's £800m investment in Interpath and Jacobs' £1.2bn acquisition of PA Consulting both commanding multiples of three to four times revenue.

All these transactions underscore the critical role M&A is playing in reshaping the UK's financial and professional services landscape. Strategic dealmaking, technology investment and operational transformation are strengthening the broader ecosystem and reinforcing the UK's position as a premier global financial centre. With AI adoption, consolidation pressures and evolving business models continuing to drive change, we expect deal activity in these sectors to remain buoyant throughout 2026.

Importantly, quality assets with a credible growth story are finding buyers across the market-including in consumer and industrials, where resilience and differentiation continue to command attention.

Preparation is the new competitive advantage

A market in motion - convergence, ecosystems and deal rationale

Life has become materially more challenging for UK Plcs. Technology advances are disrupting business models at an unprecedented pace, activist investors see opportunities to challenge corporate strategy and force managerial change, and the once-reliable benefits of globally integrated supply chains are under greater pressure than ever before.

Yet these same forces are also driving significant M&A activity. UK corporates are slimming down and divesting non-core divisions - Unilever, Smiths Industries, and Johnson Matthey among the notable examples in 2025. At the same time, businesses are acquiring access to technology through M&A, joint ventures, and commercial arrangements, recognising that buying in capability is often more efficient than building it in-house.

The result is a far more selective M&A environment, both in the UK and globally. Quality is everything. The best assets attract intense competition and command premium valuations, whilst those of middling quality are proving far harder to shift.

Activity is increasingly concentrated in areas where investor confidence runs highest: AI and technology, supporting infrastructure, data centres, energy, and sectors undergoing transformation or consolidation. Where conviction exists, investors are committing fully and placing larger bets. We are also seeing investors deploy continuation funds and other secondary structures to retain oversight of high-quality assets for longer, particularly where the value-creation journey remains underway. These mechanisms, however, are likely to be a relatively short-term fix - ultimately, dealmakers will still need to demonstrate tangible market success to raise their next funds.

As we move into 2026, we believe we are reaching the point where inactivity is no longer a viable option for many across the deals environment. In this landscape, preparation is everything. Assets need to be transaction-ready, supported by a compelling investment thesis, an AI-ready value-creation plan, a clear route to exit, and the agility to move quickly when conditions allow.

Our recent UK CEO Survey reinforces this picture: UK leaders feel under pressure to act, are investing heavily in AI and transformation, and many see deals as a critical lever to reshape their businesses.

What this means for UK investors

With the deals landscape shifting away from market cyclicality and towards targeted investing, there are significant implications for UK deal-doers:

In short, the next phase of UK M&A will favour clarity of plan, AI‑enabled value creation and deep preparation. Investors that combine these with the UK’s ecosystem strengths will be best placed to turn fewer deals into bigger, more successful outcomes.