What's Happening?
The UK mid-market buy-and-build activity experienced a significant decline in 2025, with a 61% drop in bolt-on acquisitions compared to the previous year. This downturn follows a record high in 2024, as reported by UK law firm Stevens & Bolton. The analysis
highlights that the number of add-on acquisitions by the 45 most active serial acquirers in the UK fell from 114 deals in 2024 to much lower volumes in 2025. Despite the overall decline, certain sectors like business services, financial services, and consulting remained active, while others such as insurance and education saw substantial decreases. The slowdown is attributed to macroeconomic and political uncertainties, as well as a natural pause after a period of heightened activity. The firm notes that private equity firms are focusing on integrating previous acquisitions rather than pursuing new ones.
Why It's Important?
The decline in buy-and-build activity in the UK private equity sector is significant as it reflects broader economic sentiments and uncertainties. This trend could impact the strategic decisions of private equity firms, potentially affecting their investment patterns and focus areas. The shift towards integrating existing acquisitions suggests a cautious approach in response to economic and political uncertainties. This could influence the availability of capital for new ventures and affect sectors that rely on private equity investments for growth. The focus on technology and artificial intelligence indicates a strategic pivot towards future technologies, which could shape the landscape of private equity investments in the coming years.
What's Next?
Looking ahead, the report suggests that improved economic confidence or a more stable macroeconomic environment could lead to a rebound in buy-and-build activity in 2026. This potential recovery could restore deal volumes to pre-2024 levels or higher. Private equity firms are expected to continue deploying capital selectively across established sectors, maintaining significant reserves for future investments. The ongoing focus on technology and artificial intelligence may drive strategic investments in these areas, potentially leading to new opportunities and growth in the sector.
