Value of M&A activity in UK financial services doubles in 12 months
The total value of M&A activity in UK financial services doubled in 2025, driven by resurgence in deals over £1 billion. However, the number of UK firms able to invest in companies overseas fell, as prices surged.
Many markets have struggled earlier in 2025, thanks to unpredictable economic and geopolitical conditions. In the first six months of the year, for example, total IPO proceeds in Europe reached €4.0 billion driven by 16 IPOs in Q1 raising €3.1 billion – a considerable fall from the same period in 2024, which saw €11.5 billion raised.
In the UK, the mergers and acquisitions (M&A) market for the first half of 2025 recorded a total deal value of £57.3 billion – something PwC research suggested was a 12.3% decline compared to £65.3 billion in the same period last year.
However, pent-up demand, stock market highs and steady interest rates have fuelled a surge in M&A activity that led to a strong finish to 2025. And going into 2026, the market looks to be turning a corner, particularly in the financial services sector, according to new analysis from EY.
Damian Hourquebie, financial services strategy and transactions leader at EY, commented, “Despite a challenging UK market, pro-growth investment appetite was strong last year, with total deal value nearly doubling since 2024, and renewed focus on larger strategic transactions, particularly in the banking and insurance sectors.”
The latest research from the Big Four firm suggests that the UK financial services sector saw an increase in total disclosed deal value from £19.7 billion in 2024 to £38.0 billion in 2025. This was driven by a notable rise in deals over £1 billion, with 12 transactions exceeding £1bn, and high-value activity across all sectors. This meant that while UK banks, insurers and asset managers publicly disclosed 337 deals between January and the end of December 2025, down from the record high of 378 in 2024, the total value of announced or completed transactions still rose by 93%.
Market uncertainty in the UK may be disadvantaging British companies when it comes to M&A, however. In 2025, the number of UK firms acquiring overseas targets decreased from 97 in 2024 to 88 in 2025, as overall disclosed deal value increased from £1.7bn in 2024 to £6.2bn in 2025 – suggesting some entities might have been priced out of the market. In contrast, the number of non-UK firms acquiring UK targets rose from 74 in 2024 to 94 in 2025, and the total deal value also rose from £3.9 billion to £30.3 billion.
Looking ahead, Hourquebie added, “Robust M&A activity in the UK is expected to continue in 2026. Assuming inflation and interest rates continue to stabilise, investor confidence will likely drive ongoing transaction activity. UK businesses will increasingly target significant deals that aim to bolster their long-term growth goals, optimise costs, and drive innovation in a competitive market.”
