An increase in mergers and acquisitions has led to the UK small and mid-cap market depleting at a “concerning rate”, according to analysts Peel Hunt.
A note from head of research, Charles Hall, said there was an increase in M&A activity in the first quarter of 2025, with 15 companies in ongoing bid situations.
He wrote: “The scale of M&A and lack of IPOs is resulting in a material reduction in the number of UK-listed growth companies.
“We believe it is essential that action is taken to ensure the health of the ecosystem and enable companies to grow, scale and stay in the UK.”
The six-page report set out that a total of 15 bids valued at over £100mn market cap have been announced in the year to date and have an equity value of £9bn. This compares with 45 bids in 2024, with a total value of £52bn.
Of the 15 announced in the past year, six were in the FTSE 250, four in the FTSE small cap and four on Aim.
This is coupled with a “very quiet” IPO market, with no IPOs of more than £100mn market cap in the last three months and just three in 2024.
Hall added: “The scale of M&A is partly due to the volume of outflows from UK equity funds, which has resulted in depressed valuations and enhanced the prospects for deal completion given that many funds need to raise capital and are attracted by the premia available.”
There have been outflows for 44 of the last four months, he added.
tara.o’connor@ft.com
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