As has been seen in the market generally, Prime Advantage Capital Partners are also seeing increasing interest and activity in the Mergers and Acquisitions landscape.

In 2025, UK mergers and acquisitions within the Small and Medium-sized Enterprise (SME) sector saw increased activity, improved valuations, rising deal volumes and strategic consolidations across various industries and sectors.

Overall M&A Activity:

• The second half of 2024 witnessed a 15.5% year-on-year rise in mid-market private equity (PE) deal volumes, reaching the highest levels in over three years.
• At the same time, median EBITDA multiples increased to 5.4x in 2024, up from 5x in 2023, reflecting renewed investor confidence and activity.

Future outlook:

• A 2023 survey by Marktlink revealed that 47% of UK SME leaders had considered acquiring another business in the past year, with 64% planning to do so within the next five years, indicating a strong appetite for growth through acquisitions.
• In addition, Bankers predict that up to a third of smaller companies on London’s AIM stock market could be acquired in 2025, driven by factors such as underperformance, reducing interest rates and financing costs, and strategic explorations by companies facing poor stock market reactions.

Our conclusions are that the UK SME sector in 2025 has the potential to unlock rapid growth and scale through strategic consolidations, and with many routes and possible upsides available to achieving this, we sense it could also be a more practical and achievable solution than securing funding or organic growth.

Buy & Build Strategies: Why Adopt & What to Look For…

Why Adopt a Buy & Build Strategy:

• Accelerate growth and customer acquisition.
• Increase profitability through scale, efficiencies and consolidations for cost base.
• Unlock synergies, skills and resources.
• Low entry valuations, but increased valuations through growth and at exit.
• Widens the range of buyers at exit.

What to Look For – Targets and Attributes:

• Low entry price, potentially just share deals, joint ventures.
• Can scale and unlock scale quicker.
• Easy to integrate and absorb back of house.
• Strengthen management and skillsets.
• Customer/sector diversification.
• Product/service diversification.

Prime Advantage Capital Partners are currently working with Buy & Build clients in 4 sectors:

• Legal
• Brewing & Hospitality
• Consumer Mother, Baby and Children
• Health, Fitness and Wellness

In each instance there is a platform business with revenues ranging from £1.0m to £20.0m and a significant pipeline of known and evaluated opportunities.

Prime Advantage Capital Partners is looking for investors that either specialise in or want to consider these opportunities, potentially providing significant benefits as well for invested portfolio companies, and by doing so contribute to the growth of the early-stage business economy.

For more information please contact Greg Tufnell and greg@pa-capitalpartners.com