M&A market expected to grow moderately despite uncertainty, says industry report by MHA and Baker Tilly

The forecast for merger and acquisition (M&A) activity in the UK in 2025 looks promising, with various factors driving this growth. According to a recent report by Lancashire-based MHA in collaboration with other Baker Tilly International member firms, economic stability, technological advancements, and a strong corporate desire for strategic expansion are expected to fuel an increase in M&A transactions.

Despite lingering uncertainties in the geopolitical landscape, the 2025 Global Transaction Report by MHA paints a picture of cautious optimism for a rise in dealmaking activity. This positive outlook is attributed to a decrease in interest rates in key markets and a gradual uptick in investor confidence. The report indicates that approximately 67% of global corporate finance experts within Baker Tilly anticipate a moderate increase in M&A activity over the next year, with around 16% forecasting a significant uptick.

Specifically focusing on the UK market, the report foresees heightened M&A activity in 2025, especially in resilient sectors like technology and professional services, despite economic challenges. Even in the face of inflationary pressures and regulatory ambiguities, businesses are expected to pursue strategic growth opportunities, with private equity firms staying active in the mid-market segment.

Andrew Feeke, head of corporate finance at MHA, noted that the year preceding 2025 was marked by uncertainty due to geopolitical tensions and sluggish economic growth, hampering M&A activity levels. However, a positive development was observed in the latter half of 2024 as interest rates were lowered across several markets in response to reduced inflation, fostering a more conducive environment for transactions.

Technological advances play a significant role in the M&A landscape, with tools like advanced analytics, artificial intelligence (AI), and data visualization transforming the due diligence process. It is also noted that sustainability considerations are gaining prominence, with companies aligning with global environmental, social, and governance (ESG) trends commanding premium valuations. Moreover, there is a resurgence of interest in buy-and-build strategies, particularly in industries with fragmentation, where consolidation can unlock synergies and expand market share.

While challenges persist in regions like the Middle East and Ukraine, as well as sluggish economies in Europe, the US market is anticipated to witness a short to medium-term surge in M&A activity, potentially influencing other major economies such as the UK. The growing demand for digital transformation, innovation, and automation is compelling companies to acquire cutting-edge technologies and intellectual property to stay competitive in their respective industries.

For a comprehensive analysis of global transactional trends and forecasts for 2025, interested parties are encouraged to explore the complete 2025 MHA Global Transaction Report available on the MHA website.