The UK financial services M&A market has seen a partial rebound in 2025. While persistent macroeconomic headwinds have reduced overall transaction volumes, with market data showing a 13% fall in deal volumes to Q3 2025. This gives a renewed sense of post-election stability has given buyers and sellers enough certainty for a series of large, transformational deals. This has created a clear ‘flight to quality’, where premium assets attract strong competition, evidenced by landmark transactions such as the £700m Evelyn Partners professional services carve-out. Strategic acquirers are focused on shifting how they operate, pursuing technology and particularly AI capabilities, not just for operational efficiency but as a core component of staying ahead of rivals.

Private equity (PE) has returned as a major force in the market. After a period of restraint, 65% of deals in the investment management sector were PE backed to Q3 2025. This is fuelled by the urgent need to invest near-record levels of capital, estimated at £178bn for UK-based firms, and mounting pressure from investors to return capital after a slow period for exits. With interest rates stabilising and valuation-gaps narrowing, PE activity is more focused, with a preference for capital-light and less heavily regulated assets. These financial services related businesses, such as wealth management platforms, insurance brokers and fund administrators, offer recurring revenues and are less exposed to balance sheet risk, making them ideal targets for leveraged buyouts and ambitious buy-and-build strategies in fragmented markets.

A key dynamic in 2025 is how the market's operational challenges are also catalysts for M&A. The increasing complexity and cost of compliance, including the implementation of Basel 3.1, places a direct financial burden on firms. This, in turn, acts as a strong push for consolidation, as companies merge to achieve the scale necessary to absorb such costs. This also fuels a vibrant market for RegTech acquisitions, such as Experian’s acquisition of KYC360 to enhance its fraud and financial crime compliance capabilities, as institutions choose to buy rather than build solutions. Similarly, while the intense competition for a limited pool of talent in AI and cyber security drives up wages, the need to acquire these capabilities has become a major deal driver.

This activity has created distinct areas of momentum across the market, underpinned by the now central role of a mature private credit market that continues to finance complex buyouts. Key themes include:

• Wealth management consolidation – The most active sub-sector by volume, with transactions up 25% in H1, growth driven almost entirely by PE led consolidation in a fragmented market. Activity may ease slightly following the FCA’s October 2025 Consolidation Review, which noted that while consolidation can support efficiency and scale, poor governance and compliance can create risks.
• Payments and FinTech acceleration – Strong deal pace was fuelled by the race for scale and innovative technology. Notable examples include Zopa Bank’s acquisition of AI platform Rvvup and major institutional backing for infrastructure players like Fnality.
• Corporate carveouts from large institutions – A significant portion of this deal-flow is being supplied by large institutions streamlining their operations. Major banks and insurers are increasingly divesting noncore assets to focus on core franchises. This is supplying a steady pipeline of carveout opportunities for both strategic buyers and financial buyers. Recent examples include Barclays selling its payment acceptance business to Brookfield and Sainsbury’s Bank divesting its personal loan, credit card and retail deposit portfolios to NatWest Group.