By Saskia Koopman
Copyright cityam
The UK tech sector is experiencing a resurgence in mergers and acquisitions (M&A), driven by a combination of domestic innovation, international investment and the rapid adoption of AI.
“The UK is definitely open for business”, investment banker Victor Basta told City AM.
“It has enormous talent, and for international companies, particularly those who can’t invest in the US, the UK is a stable, accessible market”.
After several years of subdued activity, 2025 is shaping up as a year of heightened deal flow, particularly from US strategic and private equity investors seeking access to the UK’s rich tech talent.
First-half data shows UK tech funding has been robust, with startups and scale-ups securing billions in investment and US buyers continuing to view UK companies as relatively undervalued compared with their American peers.
The strong dollar, combined with attractive EBITDA multiples and the UK’s position as a foothold for European operations, has contributed to a surge in M&A activity.
The sector’s growth is reflected in public market transactions, as well.
UK-listed tech companies have seen a spike in foreign bids, with high-profile deals including semiconductor firm Alphawave’s $2.4bn acquisition by Qualcomm and Oxford Ionics’ $1.1bn purchase by US-listed IonQ.
Elsewhere, private equity has also been active, taking minority stakes and pursuing partial investments rather than full acquisitions, reflecting the growing trend for flexible deal structures.
US investors and UK advantage
The UK tech’s appeal to US investors is mostly driven by lower relative valuations, a strong pool of university-educated tech talent, and a business-friendly environment.
As Basta told City AM: “The UK is definitely open for business. It has enormous talent, and for international companies, particularly those who can’t invest in the US due to regulatory constraints, the UK is a stable, accessible market”.
While political and macroeconomic uncertainties persist, such as tariff policy, regulatory shifts, and geopolitical tensions, the UK appears to remain resilient.
Government-backed initiatives, including record R&D investment, are also reinforcing the sector’s attractiveness and supporting continued M&A activity.
Deal structures and regulation
M&A transactions in the UK often differ structurally from those in the US.
Share purchase agreements (SPAs) are standard, with fewer conditions precedent and limited financing contingencies.
In contrast, US deals frequently include more complex termination rights, financing conditions, and post-closing adjustments.
Yet, the rise of warranty and indemnity insurance in the UK has narrowed these differences, offering buyers protection and increasing confidence in deal certainty.
Experts predict that embedded AI and regulatory readiness will increasingly dictate valuation.
“Buyers are now doing forensics on engineering teams”, Basta says. “If I pay £400m for a company doing £30m in revenue, I need to see £100m of value in AI talent. Those leveraging AI effectively are currently receiving about twice the valuation”.
Looking ahead
The outlook for UK tech M&A remains positive. Surveys suggest that a majority of tech companies expect both volume and value of deals to increase over the next year, with private equity and strategic buyers showing heightened interest.
Even as public listings remain challenging, M&A is likely to remain the dominant exit route, offering life-changing returns for founders and investors alike.
Basta emphasizes the importance of preparation: “Ninety percent of growth-stage companies do no exit preparation at all. If you’re going to get life-changing money once in your life, it makes sense to get ready for it”.
Those that position themselves strategically in the AI-driven market stand to benefit the most from the continuing wave of UK tech acquisitions.
