UK Trends and Developments Contributed by: Ronnie Preiskel, Karthyaeni Vittala and Daniel Preiskel, Preiskel & Co
the wider buyer group. These benefits may include cost savings, product development and staff reten- tion. Despite the integration challenges posed by earn-outs, deferred consideration pricing models are extending over longer periods and making up a larger portion of the enterprise value. ESG has become more prominent as investors are increasingly using ESG criteria to make decisions. Companies with strong ESG foundations are more favourable and are more frequently seen as sustain- able and less risky, making them more attractive to investors. An increasing number of warranties are framed around ESG, as acquirers place more empha- sis on compliance with ESG targets. Protracted deal timeframes M&A are deals taking longer to complete than in the past, which coincides with a more risk-averse investor pool and a more cautious approach to risk manage- ment being taken by acquirers in the current market, with increased emphasis on earn-outs and deferred payment. Increased regulatory scrutiny has also increased execution risk and deal timelines. Notwithstanding the fact that we are experiencing a buyer’s market, many acquirers have little to no urgen- cy in completing deals, with many spending more time “kicking tyres” while keeping one eye on the develop- ing macroeconomic situation. It is hoped that more deals will move through to com- pletion as and when there is more clarity in the political and economic climate. Evolving deal structures and private equity’s role The current M&A landscape has driven increasingly sophisticated deal structures. Earn-outs and deferred consideration are now often tied to multi-dimensional performance metrics – financial targets, strategic mile- stones, customer retention and key employee reten- tion. ESG criteria have also become a formal part of agreements, with warranties and representations increasingly reflecting sustainability and governance objectives. Private equity remains a dominant force in TMT M&A, supported by record levels of uninvested capital or
“dry powder” (estimated at USD1.5 trillion globally, and more than USD1 trillion in the US). With prolonged holding periods and a slowdown in exits, PE managers are focusing on quality over quantity, exerting pres- sure to deploy capital strategically. This fuels competi- tion for high-quality assets, drives up valuations and encourages selective participation in the lower-middle market, reinforcing the market’s bifurcated nature. The AI catalyst AI has fundamentally reshaped the strategic direction of the TMT sector, which has evolved beyond a single subsector to become the foundational infrastructure layer underpinning the entire technology ecosystem. This transformation has created a strategic imperative for companies to achieve “full-stack” ownership of AI capabilities – from semiconductor design and cloud infrastructure to proprietary models and enterprise applications. The pursuit of vertical integration across the AI value chain is now one of the key catalysts driving high- value M&A activity. Businesses are seeking to secure critical components and expertise that enable them to create and deploy AI at scale, rather than simply acquiring AI products. This shift has triggered a race among corporates and PE investors to acquire the infrastructure, developer tools, proprietary datasets and inference capacity required to sustain long-term competitiveness. According to PwC, nearly 70% of the top ten tech- nology deals by value in the first half of 2024 were software-related, amounting to over USD70 billion. The trend has only accelerated since then, with total global tech deal value reaching USD64 billion in the first quarter of 2025 – the strongest quarter since early 2024. Looking ahead, Big Tech companies are pro- jected to spend over USD300 billion on AI infrastruc- ture in 2025 alone, fuelling continued consolidation as they seek to secure key technologies and talent. This intense focus on AI capability has created an “adapt-or-be-outpaced” dynamic across the TMT landscape. Companies unable to integrate or acquire foundational AI expertise risk losing ground to more agile competitors. Consequently, AI-native busi- nesses are commanding premium valuations and are
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