While the outlook for M&A in 2025 is positive overall, certain sectors are undoubtedly better positioned than others to drive activity.
Based on the insights from our colleagues across the MHA network, both in the UK and internationally, there are clear trends shaping the opportunities ahead.
Technology, media and telecoms (TMT) continues to lead the way. The digitisation agenda, the integration of AI and the automation of repetitive tasks are not just buzzwords – they are driving real structural change. Businesses that are innovating in these areas are highly sought after, and competition for quality assets is fierce. However, scarcity of truly outstanding businesses in this sector means that valuations for those that do come to market are likely to be pushed to significant premiums.
Energy transition is another major theme underpinning deal activity. This is not just about renewables, but the broader environmental impact of how we live and work. Sectors such as testing, inspection, and compliance, along with technical engineering, are seeing significant growth. As businesses adapt to more stringent environmental standards and work to improve the efficiency of the built environment, opportunities for investment and consolidation are increasing.
Healthcare remains a resilient sector. While political rhetoric created some uncertainty, particularly following last summer’s general election, the indications are that changes to the healthcare landscape will be supportive of investment and innovation. Healthcare demand is consistent and growing, making it an attractive sector for M&A activity.
Industrials and manufacturing, too, are seeing a resurgence. While these sectors faced significant challenges during the pandemic, they are now benefitting from a greater emphasis on reshoring and supply chain resilience. Stable, profitable businesses in these sectors are attracting renewed interest, even if they are not necessarily commanding the highest multiples.
Across all of these sectors, the funding environment is supportive. High street banks have returned to the SME lending market with renewed appetite, and alternative lenders remain active. This breadth of funding options is helping to underpin confidence and enabling deals to be completed.
From a geographic perspective, India, the Middle East and parts of the Far East – particularly Singapore and Malaysia – are emerging as important markets. Middle Eastern investment is particularly strong where property-backed sectors are concerned, and Ireland continues to be a favoured route into the wider European market post-Brexit.
Of course, geopolitical uncertainty, particularly stemming from the US, is a live factor and cannot be discounted. Political developments always have the capacity to slow decision-making or impact valuations. However, the desire for cross-border M&A remains, driven by global businesses seeking growth, new markets, and access to talent.
While valuations are still broadly based on EBITDA multiples, there is an increasing focus on cash generation and free cashflow conversion. Buyers are being more rigorous in due diligence, but strong businesses with proven cash generation are commanding attractive terms.
In short, 2025 is shaping up to be a year where sector strength and quality of earnings will be key determinants of M&A success. Those businesses that are well-positioned in high-demand sectors and can demonstrate strong fundamentals will find themselves in an enviable position. In a market where liquidity is high and buyers are willing, the opportunities for growth, investment and transformation are considerable.
Andrew Feeke talks about this and more in the The MHA Podcast – Trusted Insights, Strategic Advantage. Listen to the podcast here.
