Dear M & A Santa: We promise we’ve been good dealmakers this year…

A somewhat contrived metaphor for the time of year perhaps, but the message is clear – despite a positive start to 2025, instead of accelerating, global deal volumes in H1 contracted against the same period in 2024. While reported values increased, this was generally accepted to be the result of larger groups focusing on strategic investments rather than being representative of an uptick in buyer confidence.

Of course, the region’s economy is underpinned by an ecosystem known for cutting-edge innovation, and its cornerstone sectors of life sciences, healthcare and technology, in particular, continued to be attractive to investors and acquirers. However, the region is also both home and target for global businesses and the local-deal scene was not immune to the wider pressures.

Taking a step back, the lack of deals in the last few years hasn’t been driven by a shortage of buyers or sellers; it’s the culmination of a mismatch of buyer and seller aspiration following five years of geopolitical and macroeconomic uncertainty.

Having enjoyed a period of rapid consolidation following the release of lockdown, 2023 saw the worst year for M & A activity in a decade. Dealmakers’ (and this writer’s) optimism that the tides were turning at the end of 2024 were brutally blunted by the introduction of ever-changing and aggressive tariff policies and continued and new global volatilities.

A cautious approach by buyers to investment and acquisitions was the inevitable result; a sharp contrast with the ambitions of sellers who, having worked hard to consolidate and grow their businesses, still had the high multiples paid back in 2021 clear in their minds.

However, M & A Santa clearly thought dealmakers were working hard to move to the nice list as the second half of 2025 showed signs that businesses were starting to adapt and normalise the continued turbulence of recent times as deal volumes increased. In no small way, this adaption was helped by interest rates starting to stabilise in Q3 and improved credit conditions that continued into Q4.

More recently, the release of the Budget in November and clearer visibility on the Government’s fiscal policies seems to have helped unlock a number of uncertainties that have plagued both buyers and sellers through the period.

All of this means that, as we close out the year, there’s an excitable chatter in the market that has been absent for some time. While the cautious approach to the year in general and later than usual Budget means it’s unlikely we’ll see a surge in transactions in December and a record breaking 2025, there’s no doubt that confidence is returning to the market.

Private equity – often the barometer of a healthy market – is reacting to pressure to deploy their accumulating dry powder and exit mature portfolios, while corporates that have focused on restructuring and consolidation are enjoying a renewed confidence to explore investment to achieve the next stage of growth and create exit opportunities.

Building from the trends of 2025, we expect that buy and build strategies focused in defence, AI and biopharma will produce the headline-grabbers in 2026 while businesses in the mid-market will take advantage of a comparatively stable financial landscape to prioritise bolt-on acquisitions – albeit, perhaps, at the expense of risky mega-deals.

As to the level of M & A… if 2025 has taught us anything, it is to not assume the M&A floodgates will open on the back of a positive preceding H2. So instead, this year the forecast for the coming year is one of quiet confidence rather than flamboyant optimism.

Being realistic, it is unlikely that 2026 will feature a runaway M & A boom. However, disciplined growth is very much to be expected and the East of England, with its world leading ecosystems and businesses, is well placed to be at the forefront of that growth.

M & A Santa, we promise we’ve been good…