UK Tech M&A Mid-Year Review 2025

What’s Driving the Resurgence and What to Watch Next

Executive Summary

The first half of 2025 has marked a definitive turning point for the UK tech M&A landscape. After a subdued 2023, deal activity has surged, underpinned by financial services and technology transactions, a favourable macroeconomic climate, and a wave of strategic and private equity-backed investments. UK M&A deal values rose by 37% in 2024 and continued their upward trajectory into 2025, with global tech M&A increasing 16% in early 2025.

This momentum is driven by several reinforcing factors: a weak pound making UK assets attractive, increased appetite for AI and data-native businesses, and a strategic re-entry of North American buyers. Private equity accounts for around 70% of deal activity, often executing platform acquisitions and buy-and-build strategies.

Notable H1 2025 deals include Thoma Bravo’s £4.3bn acquisition of Darktrace, Visa’s £700m acquisition of Featurespace, and Keysight’s £1.15bn deal for Spirent Communications. Meanwhile, SMEs, particularly in health tech, edtech, and AI, are achieving high-value exits as they become more deal-ready and supported by a robust regional and government-backed capital ecosystem.

As the UK market consolidates and evolves, themes such as AI integration, ESG alignment, and mid-market resilience define strategic priorities. Looking ahead to H2 2025, IPO readiness, regulatory scrutiny, and geopolitical risk will be key areas to watch for buyers and sellers alike.

Highlights

• UK deal values rose 37% in 2024; global tech M&A up 16% in early 2025
• Private equity drives 70% of UK tech M&A
• Notable deals include Darktrace (£4.3B), Featurespace (£700M), Spirent (£1.15B)
• Leading sectors: Cybersecurity, IT Services, Fintech, Healthtech, AI/Data

UK tech mergers and acquisitions (M&A) are building on the recovery that began in 2024. Primarily driven by financial services and technology activity, the market has demonstrated renewed momentum following a quieter 2023. While the overall number of deals remains slightly below pre-2022 levels, transaction values have significantly increased. In 2024, UK M&A deal values surged by 37%, and the first half of that year recorded a two-thirds rise in value despite fewer deals. That upward trajectory has carried into 2025, with global tech M&A activity climbing 16% in early 2025.

Several interrelated factors have shaped this resurgence. A weak pound, abundant capital, and an intensified focus on AI innovation have made UK tech firms highly attractive acquisition targets, particularly for overseas buyers. Private equity (PE) dominates the market, accounting for around 70% of deal activity. Alongside PE, strategic corporate acquirers, especially from North America, have made a strong return, facilitating high-value takeovers and sector consolidation.

The most prominent transactions announced in H1 2025 underscore the strength of the rebound.

Featured Deal Table: Top Announced Transactions H1 2025

Thoma Bravo’s £4.3 billion acquisition of cybersecurity firm Darktrace, Visa’s £700 million acquisition of fraud analytics specialist Featurespace, and US-based Keysight Technologies’ £1.15 billion deal to acquire Spirent Communications, a network testing company. The mid-market has remained particularly vibrant, with many founder-led firms securing growth-focused exits via PE platforms and international strategic buyers.

Market Overview: A Reinvigorated Landscape

H1 2025 has offered compelling evidence that the UK tech M&A market is entering a new era of clarity and strategic ambition. Though deal volumes have yet to recover from their 2021 peaks fully, the market is characterised by a renewed sense of strategic direction and purpose.

• The return of the megadeal: Transactions exceeding £1 billion have resumed, often aligned with long-term innovation strategies, signalling a return to high-stakes, high-impact dealmaking. The dominance of private equity is evident, as platform acquisitions and ‘buy-and-build roll-ups’ reshape fragmented sectors such as managed services and cloud infrastructure. ‘Buy-and-build roll-ups’ refer to a strategy where a PE-backed platform acquires multiple smaller companies in the same sector, consolidating them under a single entity to achieve scale and integrated service offerings. AI and data are priority themes: Strategic buyers target firms with proprietary AI models, analytics platforms, and automation capabilities.
• International capital inflows: The UK remains the second most attractive M&A destination globally, with strong inbound interest from the US, the Middle East, and increasingly Asia.
• Founder-led exits: A healthy pipeline of well-positioned SMEs is fuelling mid-market momentum.

This landscape reflects a fundamental shift: M&A is now seen not just as a route to scale but as a vital strategy for technology renewal, talent acquisition, and ESG advancement.

Sector Spotlights

IT Services

The IT services segment continues to attract sustained investor interest due to its critical role in digital transformation. In the first half of 2025, consolidation has intensified among managed service providers (MSPs), cloud migration specialists, and DevOps consultancies. Private equity-backed platforms remain at the forefront, leveraging acquisition strategies to achieve scale and integrated service offerings.

Case in Point: London-based managed services firm OneCloud was acquired by a PE-backed group seeking to build a national cloud enablement platform. The deal will unlock synergies across security, compliance, and customer onboarding.

Regionally, the Southeast and Midlands remain hotspots for IT services consolidation, owing to their high concentration of enterprise clients and digital-first SMEs. Northern hubs like Manchester and Leeds also see increased buy-side interest, particularly in specialist consultancies focused on AI infrastructure and automation.

Cybersecurity

Cybersecurity remains one of the UK’s most sought-after tech verticals. Thoma Bravo’s landmark acquisition of Darktrace is emblematic of international investor interest in British-developed security IP. Subsector demand spans next-gen endpoint protection, real-time threat analytics, and AI-enhanced security orchestration.

Case in Point: A Bristol-based cyber startup that developed cutting-edge ‘quantum-resistant encryption’ technology was acquired by a European defence contractor seeking to bolster its capabilities against emerging cyber threats. This acquisition highlights the dual commercial and sovereign appeal of UK-developed cyber tech.

In addition to London and Cambridge, regional clusters in the Southwest and Edinburgh are gaining prominence due to a strong academic pipeline and ties to national security initiatives.

Fintech

M&A in fintech has been driven by strategic consolidation across payments, fraud prevention, and open banking. Visa’s acquisition of Featurespace reflects a broader trend towards embedding real-time analytics into financial services. UK-based fintech’s remain popular due to regulatory experience, robust APIs, and high agility.

Case in Point: A Manchester-based tech firm providing AI-driven compliance tools was acquired by a Tier 1 European bank. The deal enables rapid deployment of AI compliance engines across multi-jurisdictional operations.

Fintech innovation remains concentrated in London, but regional fintech ecosystems in Leeds, Edinburgh, and Cardiff contribute significantly to deal flow and talent supply.

Healthtech

Healthtech deal activity has risen notably, underpinned by NHS digital strategies and increased investor focus on AI-driven diagnostics, remote patient monitoring, and electronic health record platforms. Investors are actively targeting scalable, interoperable tech solutions.

Case in Point: A Midlands-based firm specialising in remote oncology care platforms was acquired by a US health tech consolidator. The buyer cited the UK firm’s NHS deployment success and AI-enhanced patient triage as key drivers of the deal.

The Oxford-Cambridge corridor continues to dominate health tech M&A, although increasing innovation is emerging from the Northwest and Scotland.

Data & AI

Acquirers across sectors prioritise firms with proprietary data, automation layers, and AI-native business models. These assets command premium valuations and are central to enterprise strategies around productivity, personalisation, and predictive insight.

Case in Point: A multinational engineering group acquired a Glasgow-based AI firm focused on industrial analytics. The acquisition will improve operational efficiency and predictive maintenance across the buyer’s global manufacturing footprint.

London, Bristol, and Glasgow are notable data science and AI development centres, with growing attention on ethical AI and data stewardship as part of post-acquisition integration plans. The IT services segment continues to attract sustained investor interest due to its critical role in digital transformation. In H1 2025, consolidation has intensified among managed service providers (MSPs), cloud migration specialists, and DevOps consultancies. PE-backed platforms remain at the forefront, leveraging acquisition strategies to achieve scale and integrated service offerings.

 Trends Shaping the Landscape

• AI-Led Consolidation

Generative AI, machine learning, and robotic process automation accelerate vertical consolidation. Buyers increasingly seek AI capability as core IP and a value layer for existing platforms.

Its scale and integration depth differentiate the AI-led consolidation trend in 2025 from previous years. In 2023 and 2024, acquirers primarily explored AI through pilot investments or narrow AI add-ons. In contrast, 2025 has seen a shift to platform-level AI adoption, with buyers demanding fully integrated, commercially scalable AI solutions. M&A is no longer just about access to innovation; it’s about operationalising AI across the business.

This trend is expected to intensify into 2026 as AI governance frameworks mature and regulatory clarity around usage and ethical deployment improves. Larger corporations will likely target AI compliance and explainability technologies to meet emerging UK and EU standards. Meanwhile, SMEs with specialist health tech, cybersecurity, and industrial automation applications will remain prime acquisition targets due to their agility and focused IP portfolios.

As competition for AI talent and assets increases, we anticipate a continued rise in cross-border acquisitions and a narrowing gap between enterprise and startup AI capabilities, ultimately reshaping how value is created and defended in the tech sector. Generative AI, machine learning, and robotic process automation accelerate vertical consolidation. Buyers increasingly seek AI capability as core IP and a value layer for existing platforms.

• ESG and Net Zero Integration

Environmental, Social and Governance (ESG) factors influence deal origination and post-merger integration. Acquirers are prioritising sustainable operations, net-zero frameworks, and diverse leadership teams.

• Vertical Convergence

Traditional sector boundaries are fading. FinTechs are acquiring AI startups, and health techs are investing in data infrastructure. This convergence enables end-to-end platform delivery and cross-sector synergies.

• Mid-Market Resilience

Despite inflationary pressures and cost-of-capital concerns, the UK’s mid-market remains resilient. Well-prepared SMEs, especially those in niche or mission-critical categories, attract strong bids from financial and strategic acquirers.

• Enhanced Diligence and Structuring Innovation

Due diligence cycles are lengthening, and deal structuring is becoming more creative. Rollover equity, staged payments, and earn-outs are increasingly common as valuation gaps persist. However, businesses with proven commercial models and governance readiness are achieving favourable terms.

Spotlight on UK SMEs

SMEs remain the lifeblood of innovation across the UK tech landscape and are now playing a pivotal role in the M&A surge. Key developments include:

• A record number of exits among health tech and edtech SMEs
• Increasing participation by female-led and BAME-led businesses
• The growing role of family offices and regional investors in acquiring niche IP
• Strong support from government-backed schemes such as Innovate UK and British Business Bank

Professional advisors report that founders are more M&A savvy than in previous years, with many actively preparing for sale or scale-up through robust financial reporting, IP protection, and strategic roadmap alignment.

Looking Ahead: Outlook for H2 2025

Market conditions remain favourable as we move into the second half of 2025, but a nuanced picture is emerging. We anticipate:

• IPO Window Reopening: Market stabilisation may support IPO activity from late 2025, particularly among health tech and SaaS firms seeking public capital to scale internationally.
• Private Equity Continuity: Dry powder levels remain high. PE sponsors are expected to accelerate bolt-on and platform acquisitions, particularly in cloud services, digital infrastructure, and regulatory tech.
• Strategic Acquirer Confidence: Corporations are re-entering the market with a renewed appetite for acquisitions that deliver digital capability, ESG alignment, or operational synergies.
• Sustained Cross-Border Interest: Inbound capital from the US, Europe, Asia, and the Middle East continues to drive deal flow, with UK-based firms benefiting from currency arbitrage and perceived innovation advantage.

Emerging Regulatory Forecast

UK regulators are sharpening their lens on tech M&A, with particular attention to:

• Data sovereignty and privacy: Cross-border data transfers, particularly deals involving AI and cloud providers, have been subject to increased scrutiny.
• National security reviews: The National Security and Investment Act continues to influence deal structuring in defence tech, telecoms, and cybersecurity sectors.
• Competition oversight: The CMA is expected to take a firmer stance on digital market concentration, potentially slowing approvals for certain platform acquisitions.

These developments will require acquirers and targets alike to engage more proactively with regulatory counsel and integrate compliance planning into early deal stages.

Emerging Risks to Watch

• Political Uncertainty: With the upcoming UK general election horizon, policy or regulatory focus changes could affect cross-border investment frameworks and state aid schemes.
• Cybersecurity Threats: The increased frequency of state-linked and criminal cyberattacks may raise diligence requirements, particularly in deals involving sensitive data or critical infrastructure.
• Market Volatility: While macroeconomic indicators are broadly positive, unexpected shocks, such as interest rate adjustments, energy price spikes, or geopolitical tension, could cause short-term disruption to funding pipelines.

Firms that actively scenario-plan for these risks will be better positioned to negotiate favourable terms and achieve strategic clarity in a dynamic landscape. In 2025, market conditions remain favourable. We anticipate:

• IPO Window Reopening: Market stabilisation may support IPO activity from late 2025, particularly among health tech and SaaS firms.
• Private Equity Continuity: Dry powder levels remain high. PE sponsors are expected to accelerate bolt-on and platform acquisitions.
• Strategic Acquirer Confidence: Corporations are re-entering the market with a renewed appetite for acquisitions that deliver digital capability or ESG alignment.
• Increased Regulatory Focus: UK regulators focus on data sovereignty, competition, and foreign ownership, especially in sensitive tech verticals.
• Sustained Cross-Border Interest: Inbound capital from the US, Europe, Asia, and the Middle East continues to drive deal flow.

Conclusion and Next Steps

The first half of 2025 confirms that UK tech M&A has not only returned but evolved, with more strategic intent, greater diligence, and a focus on long-term value creation. For founders, investors, and corporate leaders, now is the time to:

• Evaluate deal readiness through an M&A lens
• Identify value drivers and competitive differentiators
• Consider acquisition opportunities to accelerate innovation

At Moksha Advisory, we partner with clients to navigate this dynamic environment, whether preparing for exit, acquiring for growth, or exploring sector-led consolidation opportunities.

→ Contact us to arrange a confidential M&A briefing or strategic planning session.

Sources

PwC UK, “UK M&A Industry Trends: The stars are aligning for deals” (2025 Outlook)

PwC Global, “Global M&A Industry Trends: 2025 Outlook” (Jan 2025)

Accountancy Today, “UK M&A value rises two-thirds in H1, PwC finds” (July 2024)

Moore Kingston Smith, “M&A in the UK IT Services sector: Q1 2025”

ICON Corporate Finance, “UK Technology M&A Review – January 2025”

Fintech Times, “UK Fintech Investment Q1 2025”

Reuters, “Visa to buy Featurespace for £700m” (Sept 2024)

Financier Worldwide, “UK healthcare M&A robust in Q1 2025”

Brabners, “6 key M&A predictions for 2025”

Norton Rose Fulbright, “M&A outlook: What to expect in 2025”

Sifted, Tech.eu, TechCrunch, and company announcements for deal-specific coverage