Introduction: Current Market Insights

As of October 2025, the mergers and acquisitions (M&A) landscape in the United Kingdom is displaying strong momentum, particularly within the private equity (PE) sector. Over the past few weeks alone, 17 deals have been reported across a broad cross-section of industries. This volume highlights continued investor appetite for growth through acquisition and signals that SMEs considering an exit should carefully observe emerging patterns.

In recent weeks, deal activity has been especially pronounced in financial services, with acquisitions such as JTC’s £20 million purchase of Kleinwort Hambros Trust Business, alongside deals involving KSL Thomas Insurance and PHL Insurance Brokers. These movements underscore a sector trend towards consolidation, resilience-building, and expanded service capability in an increasingly competitive environment.

This article explores the current trends influencing PE investment, reviews real-world case studies, and provides practical guidance for UK SMEs preparing for exit.

Market Analysis: Key Trends and Patterns

1. Acquisition Dominance over Mergers

The UK market has shifted firmly towards acquisitions as the primary growth vehicle. Unlike mergers, which typically require more complex cultural and operational realignment, acquisitions allow for targeted, strategic expansion. For SMEs, this means a heightened chance of being approached as bolt-on or platform acquisitions.

2. SME-Centric Growth

Analysis of recently completed deals shows a clear preference for small to mid-sized transactions, usually ranging between £2 million to £12 million. These valuations are more approachable for investors seeking manageable integration and quicker returns.

This sweet spot allows PE firms to enhance portfolios without taking on excessive risk, making SMEs increasingly relevant in the ecosystem.

3. Sector-Specific Targets

Recent activity indicates three standout hot sectors in 2025:

• Financial Services – Consolidation continues, with brokers and trust businesses being key targets. Strategic buyers aim to widen geographical reach and deepen service offerings.
• Healthcare & Social Care – With an ageing population and increased demand for digital healthcare, this sector remains highly attractive. For example, Foresight has invested £3 million in a health-tech firm, reaffirming investor confidence.
• Construction & Property Services – Rising profits and sustained infrastructure demand have driven renewed investor attention, with Kier’s £4 billion turnover milestone cementing sector resilience.

Deal Size Analysis

While most current transactions fall within the £2 - £12 million range, the presence of larger acquisitions (such as JTC’s £20 million deal) demonstrates the dual-track nature of the market. Mid-market opportunities dominate, but niche assets in high-value sectors remain compelling.

This environment favours SMEs ready to present robust financials, scalable models, and sector-linked strengths.

Actionable Insights for SMEs

1. Capitalise on Acquisition Momentum

SMEs should assess whether their operations are primed for acquisition. Strengthening profitability, compliance, and client retention will position companies as attractive prospects. For instance, KSL Thomas Insurance’s acquisition by The Broker Investment Group illustrates how regional players can leverage consolidation by highlighting specialisms and loyal customer bases.

2. Position Strategically

Buyers are increasingly evaluating operational efficiency, sector strength, and long-term growth potential. For firms in healthcare or financial services, aligning services with sector tailwinds is key. Operational readiness and growth projections must be clearly communicated to potential acquirers.

3. Explore Cross-Sector Appeal

As seen in Liberty Blume’s acquisition of PHL Insurance Brokers, cross-sector acquisitions are climbing. Non-sector firms seek diversification, opening opportunities for SMEs outside traditional PE targets – especially those offering complementary services, technology, or customer bases.

Real-World Case Studies

Case Study: JTC Acquires Kleinwort Hambros Trust Business

In August 2025, JTC acquired Kleinwort Hambros Trust Business for £20 million, strengthening its UK and Channel Islands presence. This acquisition demonstrates PE-backed appetite for established, high-margin service providers able to enhance global offerings.

Case Study: Broker Investment Group Expands with KSL Thomas Insurance

The acquisition of KSL Thomas Insurance, valued between £2–£5 million, marked The Broker Investment Group’s fifth acquisition this year. The transaction highlights the scalability of regional brokers able to leverage acquisitions for portfolio growth while achieving greater competitive reach.

Case Study: Liberty Blume Moves Beyond Core Sector

Liberty Blume’s purchase of PHL Insurance Brokers, estimated under £10 million, reflects a diversification strategy and signals that acquisitions across non-core sectors will remain a defining 2025 theme.

Future Market Outlook

Continued PE Appetite

Data suggests that the remainder of 2025 will see continued momentum, with confidence among private equity houses returning. Investors prioritise proven businesses and favour acquisition as an accelerator of growth.

Diversifying Ownership Models

Beyond institutional PE, family offices and HNWI / private buyers are entering the field. Recent headline cases feature husband-and-wife teams acquiring SMEs, signalling a values-led ownership style that blends community focus with modern operational structures.

Key Takeaways for SMEs

1. Be Exit Ready – Ensure financial clarity, operational efficiency, and compliance alignment.
2. Know Your Sector Strengths – Emphasise resilience in healthcare, fintech, and property services.
3. Understand Acquirer Motivations – Whether PE firms or independent buyers, knowing their goals (scale, diversification, resilience) helps tailor positioning.
4. Build Professional Support – Advisors familiar with the M&A landscape in the UK can help craft strategic and lucrative exits.

Conclusion: Leveraging 2025’s Window of Opportunity

For SMEs in the UK, 2025/26 presents a uniquely favourable environment to pursue exit strategies. Private equity momentum is clearly tilted towards acquisitions, with smaller and medium-sized deals dominating the landscape.

By aligning business models to sector trends, maintaining strong operational stability, and communicating scalable growth potential, SMEs significantly increase their attractiveness to investors.

The current M&A cycle offers SMEs not just an exit point, but an opportunity to realise enhanced valuations and strategic partnerships. Businesses that act now – positioning themselves in line with market appetite – can secure more successful, future-proofed outcomes.

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