Wales could see an increase in mergers and acquisitions (M&A) as businesses seek growth in an otherwise “sluggish” economy.
Speaking on the Finance & Investment Wales podcast, Frank Holmes, founder partner of Gambit Corporate Finance, said that acquisitions had “a serious economic impact” in terms of job creation and capital investment.
“We have a pretty sluggish economy at the moment so one way to get growth is by acquisition,” he said. “Acquirers don't buy companies just to leave them alone. They buy them to grow them, which is why it has a serious economic impact, both in job creation and investment in capital equipment.
“There's plenty of money available in the markets. Private equity is awash with it, looking for good homes. So we think that we will see significant activity from that area as well as from inward investment from overseas.”
Frank predicted that tech firms – particularly those focused on AI – as well as the healthcare and defence industries – could be a particular target for M&A activity.
“We have clients in the defence industry whose order books are bursting already,” he said. “They will be very keen targets.
“I think private equity is definitely going to deploy and will be looking for big ticket international growth opportunities.”
His views are backed by the 2025 MHA Global Transaction Report, a review and forecast of global transactional activity from merger and acquisition specialists from across the Baker Tilly International network.
Responding to the report, Andrew Feeke, Head of MHA Corporate Finance in the UK, said:
“SME-focused transactions, particularly in niche markets with regional strength, may offer untapped potential. Additionally, certain consumer markets, including e-commerce, health and wellness, and sustainable goods, are expected to show resilience and could drive M&A activity in the coming year.”
Scandinavian investors were already showing a keen interest in investing in Welsh firms, said Frank, adding that he believed that US investors would follow suit, encouraged by exchange rates.
In February, global renewables investor Copenhagen Infrastructure Partners (CIP) announced it was making a £600 million investment and would take a significant minority equity stake in both onshore wind developer Bute Energy and its sister company and grid developer Green GEN Cymru.
“British companies are good companies,” said Frank. “They tend to be very well run. The legislation in the UK is friendly so we'll always be a target for overseas buyers.”
In the Budget last October, Chancellor Rachel Reeves announced that the rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors’ Relief would increase to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026.
Bethan Cousins, new business director with Development Bank of Wales, told the podcast that this had led to an increase in business sales before the rules change.
“We certainly saw a really big spike of activity in the autumn of last year, driven by the capital gains tax changes,” she said. “We doubled or trebled the level of investments.”
The care home sector had been a particular focus for acquisitions supported by the Development Bank, said Bethan.
“We are very hopeful for a buoyant year of transactions,” she said. “There's plenty of funding out there to support the right team and the right business.”
