M&A activity down in Q3, but Q4 set for a boost as business owners fast-track deals ahead of tax rises
Economic uncertainty weighed heavily on M&A activity in Q3, leading to a decline in deal completions. But Q4 is set for an uptick as business owners fast-track deal completions to get ahead of potential tax rises in the budget, says leading audit, tax and consulting firm RSM UK.
Today’s ONS quarterly M&A statistics show the total combined number of cross-border and domestic M&A transactions involving a change in majority share ownership fell to 456 in Q3 2025, from 531 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) was 5.3bn in Q3 2025, £1.9bn higher than the previous quarter, and up on Q3 2024 (£4.5bn).
The value of inward M&A (foreign companies acquiring UK companies) reached £7.9bn in Q3 2025, a £1.8bn decrease on the previous quarter and down £3.6bn on Q3 2024. The total value of outward M&A (UK companies acquiring foreign companies) in Q3 2025 was £3.4bn, £0.2bn higher than Q2 2025, but down £0.4bn on Q3 2024.
James Wild, partner and head of M&A at RSM UK, said: “While we typically see a slowdown in deals during the summer period, this has been compounded by continued uncertainty and financial constraints, and the M&A market is still somewhat mixed. That said, a deadline often focuses the mind of buyers and sellers and as a result we’ve seen a flurry of accelerated completions in October and November as business owners transacted ahead of any potential tax changes in the Autumn Budget.
“Despite the decline in inward M&A deal values, overall volumes were driven by this type of acquisition, which may be a result of greater interest from the US. With tariffs and political uncertainty in the States putting a pause on some deals, US investors are increasingly looking across the pond for UK businesses with strong growth potential.
“Private equity activity is starting to pick up, with PE firms still opting for strategic bolt ons rather than platform deals. PE houses are under increasing pressure to deploy capital, so opting to “bolt on” another business to an existing company, with a proven track record, tends to be a safer option.
“The budget will have provided business owners with much-needed certainty so they can now carefully consider whether a sale is the right option for them. Many will be relieved to see the headline rate of capital gains tax wasn’t increased, but the reduction in tax relief for employee ownership trusts (EOTs) will undoubtedly slow the pace of change to this ownership model. That said, tax shouldn’t be main driver for adopting an EOT, and they remain a credible succession route.”