UK Trends and Developments Contributed by: Ronnie Preiskel, Karthyaeni Vittala and Daniel Preiskel, Preiskel & Co
expected to remain at the centre of dealmaking activ- ity throughout 2025 and beyond. AI and technology in M&A Since the introduction of ChatGPT, AI-driven pro- cesses have become a highly sought-after resource and have been likened to the advent of the modern internet 30 years ago. AI and AI-driven processes are still in their infancy and continue to show teeth- ing problems, such as bias, security issues and inac- curate input. However, the growth potential for AI is unrivalled. It is a rapidly growing field with applications across various industries, from healthcare to finance to entertainment. Companies that successfully lever- age AI will see significant growth in the coming years. The M&A process has seen the integration and appli- cation of AI; whether companies are acquiring or being acquired, the use of AI will increase efficiency and lower cost. For the acquirer, the digitisation of the M&A process itself has significantly impacted deal speed by enhancing the due diligence process and reducing the overall transaction cost. For the acquired, increased digitisation aids value creation, provides smoother transition and minimises technology-related risks, such as cybersecurity, in the integration phases. Horizon scan: M&A in emerging technology frontiers While current M&A is dominated by AI, forward-look- ing investors are targeting the next waves of disrup- tion, often prioritising the acquisition of scarce techni- cal talent. • Agentic AI: autonomous systems capable of plan- ning and decision making are attracting deals for both technology and expertise. Investments focus on securing proprietary models, infrastructure and developer tools, with many transactions effectively functioning as “acqui-hires”. • Autonomous vehicles: M&A is driven by AI- powered perception, sensor data processing and advanced driver-assistance systems, with acquisi- tions aimed at expanding both consumer and B2B mobility solutions. • Quantum computing: although mainstream adop- tion is still years away, consolidation and talent acquisition in this sector are accelerating, with
deals focused on qubits, cybersecurity applications and R&D capabilities. In each domain, human capital is often the primary asset, making integration and talent retention critical to deal success. This trend reflects a broader strategic shift: investors are increasingly buying capability and Private equity entities sitting on record levels of uncapitalised investment continue to be a major driver in M&A. PE houses often favour technology, media, telecoms and industrial manufacturing, which are among the most active sectors for PE deals and are attracting significant investment due to their growth potential and strategic importance. The general decline in M&A “mega-deals” has led to PE firms more frequently participating in mergers, acquisitions, joint ventures and minority shareholdings within the lower middle market. This shift is largely due to the high cost of capital and the preference for more manageable investments. expertise, not just products or IP. The dominance of private equity With traditional bank lending slowing down, PE has become a vital source of capital for corporates, and continues to spur the M&A market. However, whispers of tighter regulatory oversight and uncertainty under the new government have meant that PE firms will need to keep abreast of and navigate potential hurdles if they are to maintain dominance in the M&A market. In 2024, the slowdown in PE exits indicated that fund managers were focusing more on quality than quantity when selling, managing to secure healthy valuations despite challenging market conditions. Consequently, PE firms are now placing more emphasis on value creation and seeking further organic growth oppor- tunities following previous rounds of PE ownership. However, PE funds continue to sit on record levels of ageing “dry powder”, which has been horded over the past several years. PE funds will begin to come under fire from investors to invest, to raise further funds and to create liquidity. Ultimately, the uncertainty in the market has meant that PE funds have been on the fence with regards to capital deployment.
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