The UK mid-market year can only be described as a story of two contrasting halves. The first six months of 2025 delivered steady confidence, stable activity levels and a good pipeline of M&A opportunities. As the year progressed, however, the downturn in economic indicators, rising unemployment, and the squeeze on business margins began to show. By autumn, many owner-managers had stepped back from major decisions, waiting for greater clarity on tax, policy and the economic outlook.

Yet despite a tougher backdrop, the year has also demonstrated the resilience of UK business owners and the strength of strategic acquirers and investors who continued to pursue high quality opportunities. And with clearer political and tax landscape ahead, the foundations for renewed momentum in 2026 are now more visible.

A challenging environment

Slowing GDP growth across the year coupled with stubborn and persistent inflation has heavily impacted businesses. Many businesses have felt this directly through shrinking turnover and profitability, amplified by an increase in cost bases driven by changes to National Insurance and broader wage inflation.

UK corporate insolvencies also rose, and unemployment increased across the year. Youth unemployment in particular climbed to its highest level in several years, a trend that added pressure to sectors reliant on younger labour pools. Investment intentions softened as businesses prioritised operational stability and cash preservation.

This environment translated into reduced deal volumes. The Experian MarketIQ analysis of 2025 data reported a 16% decline in overall deal activity. Dealmakers across the country have echoed similar themes: elongated timelines, extended diligence processes, and acquirers taking a more selective approach.

What is notable, however, is that the slowdown has been cyclical rather than structural. The underlying drivers for transactions remain firmly in place, and the appetite from both trade buyers and private equity continues to be healthy where businesses demonstrate resilience, have strong management teams and clear growth potential.

The latter half of 2025 became a waiting period for many owner-managers. The combination of economic uncertainty and a pending Budget meant many business owners chose to delay decision-making.

The Autumn Budget provided a little more clarity, particularly around support for SMEs, manufacturing, AI investment and capital allowances. Sentiment indicators are already pointing towards a more positive outlook. Banks have begun signalling increased appetite for leveraged transactions, and private equity continues to hold significant dry powder that will need to be deployed. Many of the paused discussions in 2025 are expected to restart early in the new year.

Against this backdrop, the team at Evolve Corporate Finance delivered several significant transactions in 2025, each demonstrating that high quality businesses still achieve excellent outcomes, even in a challenging market.

These included:

• Opus Safety: We advised Opus Safety on securing a minority investment from BGF and acquisition facilities from OakNorth to accelerate their growth plans.

• Avon Freight Group: We supported the shareholders of Avon on their sale to Ireland-based Primeline Group, bringing together two leading logistics providers.

• Nortech Management Ltd: We advised Nortech on its sale to Swedish Nasdaq-listed infrastructure group, Vestum AB, marking another successful cross-border transaction.

• Veker Extrusions & Gaskets Ltd: Our team advised Veker, a Midlands-based rubber manufacturing specialist, on its sale to a strategic market consolidator in the industrial sector.

These deals highlight two important points. First, well-run businesses with strong fundamentals will always attract interest, regardless of the broader cycle. Second, the mid-market remains active across a range of sectors, particularly where businesses offer recurring revenue, resilience and strategic value to acquirers.

A year of progress for Evolve Corporate Finance

While the external market has been mixed, 2025 has been a year of meaningful growth and development for Evolve.

The firm moved into larger offices, creating space for continued growth and enhancing the environment for both clients and the team. The launch of our new website in the summer further strengthened our digital presence, giving clients a clearer window into our transactions, insights and sector capabilities.

Our team continued to grow too. Tom Hammond was promoted to Partner, recognising his impact on clients and the firm, while Georgie Arthur stepped up to Manager. We were also pleased to welcome Liam Bradley and Shivan Vallabh, adding further depth to our advisory capability.

Our work was acknowledged across the region, with the firm shortlisted for the Business Desk West Midlands Rainmakers Awards. In addition, our advisory role on the sale of Pet Treats Wholesale to The Nutriment Company was named ‘Deal of the Year (sub £10m)’ at Insider Media’s Midlands Dealmakers Awards 2025, a great endorsement of the quality of work delivered by the team.

Looking ahead to 2026

With inflation on a downward path and increased clarity on government policy, the conditions for a more active M&A market are coming into view. Many of the pressures that defined 2025 should begin to ease, and both trade acquirers and private equity investors are already signalling renewed confidence.

We expect the following themes to shape the 2026 landscape:

• Greater availability and improved pricing of debt funding

• A rebound in mid-market deal volumes as postponed transactions resume

• Continued buyer appetite for resilient sectors including tech-enabled services, industrials, logistics and health

• Increasing international interest in UK assets as valuations stabilise

• Stronger exit opportunities for owner-managers who chose to wait during 2025

2025 challenged many businesses, dealmakers and investors, yet it also demonstrated the resilience of the UK mid-market and the continued appetite for strong opportunities. Evolve’s year included several high-quality deals, continued investment in the team and infrastructure, and the strengthening of its leadership.

As we enter 2026, the outlook is brighter. Economic conditions are expected to improve, confidence is returning, and the mid-market is well placed for renewed activity.

Evolve will continue to support business owners, management teams and investors through the next phase, guiding them through their most important decisions and helping them achieve outstanding outcomes.

If you’re considering your next move, whether that’s selling a business, planning an acquisition, or exploring funding options, our team can guide you through every stage of the process. Get in touch with our team today.