Joanne Gallagher, head of corporate at Thomson Snell & Passmore, discusses the return of M&A activity across the South East and why cautious buyers and slower decision-making continue to shape the market.
How would you describe the current health of the South East corporate finance market compared with 12 months ago?
From the transactions and conversations we are seeing across the South East, London and the wider UK market, the corporate finance market is moving again, but remains difficult. Compared with 12 months ago, there is more willingness to test buyer appetite and explore transactions, although confidence is still fragile and many processes are taking longer to move from early interest to heads of terms and completion.
Are you seeing greater confidence among buyers and sellers, or are businesses still approaching transactions cautiously?
Caution remains the defining feature. Owners and buyers are operating against economic uncertainty, changing political priorities and heightened geopolitical risk, with some owners waiting for greater clarity before committing to a sale process.
For private company M&A, this does not mean the market is closed. It means it is more selective. There remains credible buyer appetite from regional and national trade acquirers, overseas purchasers and private equity-backed platforms, but buyers are taking longer to commit and are less willing to overlook issues that might previously have been addressed later.
The businesses attracting the strongest interest have resilient earnings, reliable management information, clear margins, low customer concentration and a credible growth story. Where those features are missing, processes can become drawn out. Execution risk has become central: not just whether a deal can be agreed, but whether momentum can be maintained through diligence, negotiation and completion.
What’s motivating business owners to sell at the moment?
For sellers, the main drivers remain retirement, succession planning, shareholder realignment and a desire to de-risk after several demanding years. Many founder-led and family-owned companies are
assessing whether the right buyer, structure and valuation are available now, rather than simply trying to time the top of the market.
Some owners are delaying a sale until trading, tax policy and buyer sentiment feel more settled. Others are considering management buyouts, partial exits or Employee Ownership Trusts. EOTs remain relevant, particularly where culture and continuity matter, but they are only one option.
Has the valuation gap between buyers and sellers begun to narrow?
Valuation remains one of the hardest areas to manage. The gap between buyer and seller expectations has narrowed in parts of the market, but has not disappeared. Sellers often have historic benchmarks in mind, while buyers are pricing current risk, future trading assumptions and execution uncertainty.
That does not prevent deals completing, but structure is often as important as the headline price. Earn-outs, deferred consideration, W&I insurance and other risk-allocation tools can help bridge the gap or de-risk the transaction, but need careful drafting. Sellers need to understand when future payments are triggered, what control they will have after completion and how disputes will be resolved.
What role are overseas investors currently playing in South East transactions?
Cross-border activity is no longer a niche feature of mid-market M&A. Many transactions now have an international dimension, whether through an overseas trade buyer, a foreign private equity-backed platform or a UK target with overseas subsidiaries. Overseas buyers are looking for quality businesses with strong management, resilient revenues, specialist capability or access to new markets. The challenge is that cross-border deals typically carry greater execution risk, with longer approval chains, deeper diligence and additional tax, regulatory, currency, structuring and integration issues to manage.
How much activity are you seeing around bolt-on acquisitions by established businesses?
Bolt-on acquisitions are providing a steady source of activity. Established businesses and private equity-backed platforms are still looking for acquisitions that add scale, customers, capability or geographic reach. These buyers remain disciplined, prioritising businesses that can be integrated without excessive disruption and where the commercial rationale is clear from the outset.
Are due diligence processes becoming more complex?
On larger and more complex mid-market processes, due diligence has become more demanding, and sellers who are not deal-ready can quickly lose leverage. Buyers are focusing on customer concentration, margin sustainability, working capital, employment issues, cyber resilience, data protection, supply-chain exposure and artificial intelligence use.
One common mistake is assuming strong trading performance will be enough. It is important, but not the whole picture. A buyer also wants confidence that the business is transferable, key contracts are in order, IP is protected and the management team can operate without the owners.
If a business owner is considering selling in the next three to five years, what should they be doing now?
For any owner considering a sale in the next three to five years, now is the time to become genuinely deal-ready: improving management information, reviewing shareholder arrangements, checking key contracts, protecting IP, resolving employment and incentive issues, and stress-testing the growth plan.
Legal housekeeping in the current market can directly affect value, leverage and timetable. The best outcomes usually come where legal, tax and corporate finance advisers are involved early, particularly where there are multiple bidders, overseas parties or complex group structures.
The next 12 to 18 months are likely to remain uneven. There is appetite in the market, but not at any price and not for every business. Whilst deal activity is picking up, decisions remain slow, and execution risk remains high. Success will depend less on waiting for perfect conditions and more on being ready when the right buyer appears.