The UK witnessed a notable increase in deal values during 2025, driven predominantly by escalating demand for artificial intelligence (AI) and digital infrastructure, as detailed in PwC’s latest Global M&A industry trends 2026 outlook report. Overall deal values surged by 12 percent, rising from £117 billion in 2024 to £131 billion in 2025, despite a 12 percent decrease in deal volume, which fell from 3,411 deals in 2024 to 2,991 the following year. This divergence underscores a selective buying environment where investors are focusing capital on high-quality assets that promise substantial technological capabilities and value creation potential.
According to PwC, the average deal size increased by 28 percent, growing from £34 million in 2024 to £44 million in 2025. This trend reflects a significant shift in buyer conviction, with funds being concentrated on fewer, yet higher-value transactions. Lucy Stapleton, Head of Deals at PwC UK, noted the unusual nature of this market, stating, “We would not usually expect deal values to rise so sharply when volumes are falling, which underlines how exceptional current market conditions are.” The competition for AI and technology-related assets remains fierce, while broader economic growth opportunities are viewed as more challenging.
Despite a relative decline in deal volumes when compared to the peaks of 2021-2022, PwC’s analysis indicates a strong upsurge in deal preparation activities among both corporate and private equity buyers during 2025. As valuation gaps narrow and economic conditions stabilize, this trend is anticipated to pave the way for increased deal activity in 2026. The buoyancy in the UK market is notably attributed to the rapid scaling of AI-enabled business models and the supporting infrastructure. Significant transactions in 2025 were largely influenced by robust investor interest in data centers, digital infrastructure, and cloud platforms.
Stapleton remarked, “After a difficult period for the UK deals market, 2025 marked a turning point. Inflation moved back towards target, interest rates stabilized and confidence gradually returned.” This renewed momentum is attributed to strategic transformation agendas, the accelerating impact of AI, and a revival in capital availability, particularly from private credit and substantial global funds. Companies are now focusing on building sharper investment theses and concentrating on assets that bring technological capability along with accelerated growth and resilience. Such preparations, she predicts, will lead to an increase in successful deals in 2026.
The report also highlights key sectors for mergers and acquisitions (M&A) activity in 2025. The Technology, Media, and Telecommunications (TMT) sector recorded 590 deals, buoyed by a strong demand for AI, cloud, and data-rich assets. Even with a drop in deal volumes, valuations for premium assets surged, with multiples in some sub-sectors outpacing historical norms. The Financial Services sector saw significant activity, notably with some of 2025’s most substantial deals in insurance and asset management, with values increasing by 44 percent year-on-year. This consolidation and modernization trend reflects a sector-wide investment in next-generation technology platforms.
In the Energy, Utilities, and Resources sector, deal value rose to £18 billion, despite a slight decline in deal volumes, fueled by a focused investor interest in energy transition, infrastructure resilience, and portfolio rotations. The Consumer Markets and Industrials sectors were the most active by deal volume, recording 802 and 648 deals respectively; however, both experienced reduced activity due to cost pressures, global trade tensions, and diminished consumer sentiment. Still, industrials remain focal points for strategic transformations and consolidation efforts.
Meanwhile, the Health Industries sector maintained solid activity levels, particularly in life sciences and healthcare services, with strong valuations for specialist, data-driven assets. Despite the resilience seen in UK valuations, Stapleton cautioned that challenging market conditions persist as 2026 begins. “Outside the most structurally attractive areas, activity has been more reflective of the UK’s broader low-growth environment,” she stated. Buyers are increasingly cautious, necessitating deeper preparation, clearer value-creation plans, and stronger evidence of resilience before progressing in transactions.
For further insights, visit PwC UK‘s website for their in-depth outlook on UK M&A trends for 2026.
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