M&A in UK financial services - will mega-deals in 2025 lead to more mid-market activity in 2026?
The UK financial services sector witnessed a strong showing for M&A in 2025, with total disclosed deal value rising to £38bn from £19.7bn in 2024 despite fewer deals (337 vs 378), as activity skewed towards larger, strategic transactions - with 12 deals exceeding £1bn. This trend tracked through UK banking, asset and wealth management, and insurance transactions. Cross‑border deal flows intensified too, with inbound acquisitions up >25% and value jumping to £30.3bn, while UK outbound value rose to £6.2bn on fewer deals. The UK financial services sector, then, is still an attractive field for global investment.
Looking ahead, despite current UK market conditions EY expects robust 2026 M&A activity across the sector, particularly if inflation and rates remain stable, as boards continue targeting scale, cost optimisation and innovation. We echo that sentiment and have witnessed that with our own clients. Despite only being a few weeks into the year, we are already seeing signs that healthy deal volume should continue well into 2026.
In particular, whilst the trend throughout 2025 reflected steady deal volume but with more high-value transactions, we also expect 2025 activity to instil confidence across the mid-market activity in 2026. Despite UK fiscal policy challenges, there remains opportunities to utilise private capital for growth – in particular, driving scalability of products and services, and taking advantage of technological opportunities (particularly with artificial intelligence becoming ever-more embedded in firms’ operations and services). Additionally, qualifying mid-market firms looking for investment for growth may also look to utilise the Enterprise Investment Scheme for investors as part of equity fundraisings, the scope of which is expected to be significantly widened from April following announcements made in the Budget in November last year.
If you are a business operating in the financial services sector exploring M&A strategy, or a private capital investor in the space, please don't hesitate to reach out.
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.
