UK-Italy M&A: trends and opportunities in 2025

The cross-border M&A landscape between the UK and Italy continues to thrive, driven by robust economic ties, strategic investments, and growing private equity interest. As we look towards 2025, this dynamic relationship presents significant opportunities for businesses seeking growth, diversification, and cross-border synergies.

What’s driving UK-Italy M&A activity?

1 – Strategic market expansion

UK companies are tapping into Italy’s high-potential sectors, such as luxury goods, energy, and infrastructure, while Italian firms see the UK as a critical hub for global market access post-Brexit.

2 – Private equity surge

Private equity (PE) funds have become a key force, particularly in mid-market deals. Investors are increasingly targeting undervalued Italian assets and using UK platforms to scale operations internationally.

3 – Resilience post-pandemic

Both economies have demonstrated strong post-pandemic recovery, leading to renewed strategic consolidations. Businesses are now prioritising cross-border partnerships to drive innovation and operational efficiencies.

Legal and regulatory frameworks: a cross-border balance

Navigating M&A deals between the UK and Italy requires careful planning, particularly due to differing legal frameworks:

• UK: governed under the Companies Act 2006 and Financial Conduct Authority (FCA) regulations, the UK M&A market emphasises transparency and streamlined processes, favouring share purchases for simplicity.
• Italy: transactions adhere to the Italian Civil Code, where shareholder approval and governance structures — common in family-owned businesses — demand a relationship-driven approach. Italy’s Golden Power regime may also require foreign direct investment (FDI) approval in critical sectors like defence, telecoms, and energy.

Key opportunities and challenges

1 – Sector spotlight

• Luxury and fashion: Italy’s iconic brands remain prime targets for UK-based investors looking to diversify
• Green energy: renewable energy projects in Italy align well with the UK’s sustainability goals, creating collaborative opportunities
• Tech and innovation: Italy’s SME-driven tech ecosystem complements the UK’s advanced technology and finance infrastructure.

2 – Cultural considerations

Successful M&A deals hinge on understanding cultural nuances. In Italy, family-owned businesses dominate the SME market, requiring trust-building and careful governance planning — an aspect UK dealmakers must approach with patience.

3 – Structuring Deals

To mitigate risks and align commercial goals, businesses are increasingly using innovative deal structures:

• Joint Ventures (JVs) to overcome regulatory hurdles and share operational responsibilities
• Deferred consideration and earnouts to bridge valuation gaps, ensuring sellers are incentivised post-deal.

4 – Compliance and FDI

Both markets enforce FDI regulations to protect strategic industries, adding an additional layer of diligence for dealmakers. Ensuring compliance while aligning transaction goals will be essential.

2025 outlook: What’s on the horizon?

Despite economic uncertainties, the outlook for UK-Italy M&A remains resilient, with several emerging trends:

• Increased activity in high-growth sectors: green energy, technology, and luxury are poised to lead the way as businesses seek innovation and sustainable expansion
• Rising joint ventures: expect to see more JVs as companies collaborate to mitigate regulatory risks and optimise capital deployment in infrastructure and energy projects
• Private equity dominance: PE investors will continue to dominate mid-market deals, targeting undervalued Italian assets and using the UK as a springboard for global growth.

Key insights for dealmakers

• Strategic partnerships: a collaborative approach and tailored deal structures are critical for navigating cultural and legal complexities.
• Thorough due diligence: rigorous preparation—covering tax implications, governance, and FDI approvals—ensures deals are both compliant and value-driven.
• Long-term value creation: successful M&A goes beyond financial gains; fostering synergies, innovation, and operational excellence is key to sustainable growth.

The UK-Italy M&A corridor offers immense potential for businesses willing to bridge differences, embrace collaboration, and innovate for the future. As 2025 approaches, those equipped with the right strategy, advisory support, and cultural awareness will unlock enduring value and new opportunities in these two vibrant markets.