UK M&A activity sees sharp drop in H1, PwC finds

UK mergers and acquisitions (M&A) activity fell sharply in the first half of 2025, with the number of transactions down by almost a fifth compared to the same period last year, according to PwC’s latest Global M&A Industry Trends report.

A total of 1,478 deals were recorded between January and June, spelling a 19.1% drop from 1,828 in the first half of 2024. Total disclosed deal value also declined, down 12.3% to £57.3bn from £65.3bn year-on-year.

However, the average value of transactions with disclosed prices rose to £169.2m, pointing to a more selective but strategic approach to dealmaking. PwC attributed this to increased investor focus on high-value opportunities, particularly in sectors such as financial services, technology, media and telecommunications, and industrials and services.

The data suggests capital is being deployed in a more targeted way, with investors prioritising resilient assets and long-term growth prospects. Among the key drivers was a cluster of large-scale investments, including four deals in financial services each worth more than £1bn.

By sector, industrials and services led the market with 400 transactions in the first half of the year, more than half of which were in business services. Consumer markets saw 310 deals, followed by technology, media and telecommunications with 307.

In terms of deal value, financial services accounted for the largest share at £17.0bn. Technology, media and telecommunications and industrials and services each followed with £10.8bn.

Lucy Stapleton, global head of deals at PwC UK, 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.”

Colin Smith, partner at PwC, added: “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.”

PwC said the outlook for the second half of the year would depend on broader macroeconomic and geopolitical stability. With available capital and well-defined strategic goals, conditions are likely to support continued dealmaking.