Strong deals activity in Scotland despite volatility

Experian’s most recent report on M&A activity found that following a strong start in the first half of 2024, Scotland recorded 256 deals in the first six months of this year with a total value of approximately £3.6 billion.

Anderson Strathern advised Foundation of Hearts, majority shareholder of Heart of Midlothian PLC, with regard to the £10 million investment made by Tony Bloom | SNS Group

The report stated: “While this represents a 13 per cent decrease in value compared to the same period last year, there were several encouraging trends.“

Notably, the number of larger deals rose significantly, increasing by 75 per cent from four to seven transactions. Smaller deals continued to form the majority of activity.”

Paul Scullion, head of corporate at Burness Paull, comments: “The transactional market has been resilient in the face of headwinds, and activity has been steady across the board.”

He adds that this year’s Spring Statement accelerated decision making after a slower period. Tax changes created a natural deadline, pushing many deals to complete before the new tax year.

Scullion continues: “More generally, the stabilisation of interest rates has supported confidence by providing greater certainty around the cost of capital. All these factors combined have sustained activity levels across the market, with private equity continuing to play a prominent role.”

He explains that Burness Paull’s position in the market, and the fact it has the biggest Scotland-based corporate M&A team, has seen it advising on high-value, complex matters in Scotland, across the UK, and internationally – either as lead adviser or acting alongside some of the world’s leading law firms.

An example is its role advising Wood Group in its support of Slaughter and May on the proposed takeover by Sidara.

Jack Letson, partner and head of corporate at CMS Scotland, says: “Despite a fall in overall Scottish deal volumes and fewer high-value transformation deals, there is still resilience in the M&A market with a focus on well structured transactions with straightforward synergy benefits. Along with increasing deal flows in real estate and private equity, we’re also witnessing a rise in founder disposals ahead of the Budget.”

He adds that 73 per cent of respondents to its CMS European M&A Outlook survey expect deal volumes to increase in 2026. Letson says: “Scotland mirrors this confidence, particularly across energy, technology, including fintech, and AI-enabled sectors.”

CMS deals he highlights include Equinor/Shell, the largest United Kingdom Continental Shelf transaction of the year, creating the UK’s biggest independent North Sea producer.

Barry McCaig, Pinsent Masons head of corporate in Scotland, reports that his firm has enjoyed a busy and successful 12 months, highlighted by a number of significant high-value deals involving home-grown businesses and international concerns.

“Typical of those was advising on the sale of Glasgow-based Turner Aviation in July, which was acquired by Precision Aviation Group, a US-based global provider of aerospace services,” explains McCaig.

Rod Hutchison, Aberdein Considine corporate and business advisory partner, and energy team lead based in Aberdeen, says deal activity has been slower than many commentators forecast, but there has still been a decent number of transactions completed.

“We’re seeing a more cautious approach from buyers, who are placing more emphasis on the legal due diligence enquiries and, increasingly, providing for the possibility of post-completion price adjustment,” he explains.

“In addition, they’re deferring payment of consideration, partly as a way to mitigate against having to recover money under price adjustment mechanisms, and partly as a method of funding the transaction. There has also been an increase in the number of transactions that have aborted following signing of heads of agreement, generally due to commercial considerations. We are also seeing a lot more interest in disposals of shares in companies to Employee Ownership Trusts.”

Aberdein Considine’s M&A work over the last year has included acting for 71 Brewing in its merger with Bon Accord Soft Drinks and the shareholders of Aberdeen Web in its sale to Pewag.

Donald Smith, partner in corporate finance at Shepherd and Wedderburn, points out that in line with trends across the UK and in many jurisdictions internationally, deal volumes have remained relatively muted through 2025, albeit there has been an increase in larger-ticket transactions.

Overall, market conditions have remained challenging for many private equity sponsors and their portfolio companies. Smith says his firm has advised clients on a broad spread of major M&A transactions across sectors, including Kelso Pharma on the growth of its specialty pharma business.

He adds: “Stubborn inflation and modest economic growth seem likely to continue to challenge M&A deal volumes, with the well-documented private equity dry powder still largely waiting in the wings. This being said, appetite remains strong for the best assets and creativity is helping to get deals completed.”

According to Neil Burgess, partner and head of corporate and commercial at Brodies, there have been fluctuations in the flow of UK and international deals, with some volatility in the investment and M&A markets generally, largely attributable to macro-economic and geopolitical issues.

“However, with interest rates and inflation in the UK having largely stabilised, that degree of increased certainty in the market is feeding an appetite for deals in many key sectors across the Scottish market. From our clients we’re seeing those movements particularly evident in, for example, the energy, technology and business services sectors.”

Deals highlighted by Burgess involving Brodies include acting for The Parkmead Group on its sale of the entire issued share capital of Parkmead (E&P) to Serica Energy.

“Currently, there is a steady flow of corporate M&A activity, especially in energy and technology. Despite fiscal and regulatory challenges, some North Sea oil and gas companies continue to generate significant free cash flow,” Burgess adds. “We are anticipating a significant uptick in M&A activity, as Scotland follows the global trend.”

Brian Moore, corporate partners at Dentons, says that despite such factors as disruptive geopolitical headwinds, he continues to see an encouraging level of M&A activity in the Scottish market – particularly transactions with a cross-border element, or where an overseas buyer is intent on acquiring a Scotland-headquartered target.

A recent example of an M&A deal led by Dentons Scotland, with both Scottish and cross-border features, was the US$110m acquisition by Nasdaq-listed ride-hailing giant Lyft Inc. of Dentons client TBR Global Chauffeuring, a business founded and headquartered in Scotland with operations across the globe.

Moore expects 2026 to be a strong year for M&A, driven by factors such as a need for private equity investors to exit existing portfolio investments and invest in new opportunities, and by corporates seeking to accelerate growth and business transformation through acquisitions.

Danny Lee, partner and head of corporate in Scotland at law firm Burges Salmon, believes there has been solid M&A activity across Scotland, with tax reforms acting as a key catalyst for accelerated deal-making.

He explains: “We’ve supported a wide range of clients navigating exits, succession planning, and strategic growth. Activity has remained particularly strong in the energy sector, where our team advised on both investments and disposals –including acting for Aberdeen-based Encomara, a floating wind and subsea engineering firm, on its sale to Inverness-headquartered Aurora Energy Services.”

Lee adds: “What’s encouraging is the continued appetite from private equity and overseas investors, which speaks to the strength and scalability of Scottish businesses. All that said, there is no denying that there are a number of macro factors at play which have created a number of headwinds, particularly in the context of fundraising. “Nevertheless, we are hopeful that deal flow will bounce back in the first half of 2026 – albeit much will depend on what is announced in the Autumn Budget later this month.”

According to Euan Tripp, partner at Anderson Strathern, activity has picked up as the year has progressed: “The first half of the year was quieter, mainly as a result of political and economic volatility such as the uncertainty with trade tariffs, for example.

“That stagnation has moved on, and there has been a leap in activity, as buyers realise that economic and political uncertainty represents a ‘new normal’ that cannot simply halt activity.”

One of his firm’s more high-profile actions was representing the Foundation of Hearts, majority shareholder of Heart of Midlothian PLC, with regard to the £10 million investment made by Tony Bloom.

On current trends, Tripp concludes: “We’re seeing bigger funds turning their attention to regional investment, for example, funds based in Scotland looking throughout Scotland as well as to opportunities in Northern Ireland and the North of England.“It’s encouraging to see the focus shift outside of London and a number of factors driving this shift – from untapped opportunity and growth potential, to aligning with the government’s industrial strategy and other policies with a focus on ‘place’.”

More consolidation on the cards in the Scottish legal sector

Further consolidation is expected in the Scottish legal sector in the near future, partly in response to technological changes and firms looking to build upon their talent pools with strength in depth.

Andrew Blain, managing partner at Edinburgh firm Shepherd & Wedderburn, observes: “A combination of a challenging economy, increasing regulatory burden, and the need to invest in technology – particularly artificial intelligence and cybersecurity – is likely to drive further consolidation in the market.”

Brian Moore, corporate partners at Dentons, says: “We expect to see more mergers between law firms in Scotland in the period ahead. Well-chosen merger partners can allow law firms to make much more rapid progress towards achieving their strategic goals by bringing together complementary service offerings and subject-matter experts more quickly and effectively than hiring individuals or teams.”

Rod Hutchison, Aberdein Considine’s corporate and business advisory partner and energy team lead, based in Aberdeen, foresees more M&As among legal firms

.He explains: “Looking at recent mergers, there is an appetite to consolidate between firms that are strong in particular specialisms and sectors, but perhaps don’t have the same strength and depth in others.

“Also, combining forces affords a chance for legal firms to streamline support services and combine their physical offices at a time where competition for work is driving a focus on profitability to hedge against negatively impacted revenues.

“In my view there are a number of smaller firms that may experience issues with succession planning and recruitment in the near future that might have an enviable client list that larger competitors can assume into their practice.”

Peter Lawson, chair of Burness Paull, says: “The expansion of AI presents both considerable opportunity and challenge for the legal profession. Those who embrace and best adapt to change – leveraging AI to work more strategically, commercially and efficiently in support of their clients, will be the ones who succeed.

“Funding the AI solutions and technology upgrades needed to facilitate that will require significant investment. Along with rising costs more generally, this will likely prompt firms to seek greater scale and resources. Therefore, it would not be a surprise to see further consolidation in the legal sector over the coming years – driven, in part, by external investment into law firms.”

“External investment is not currently an option open to Scottish firms. However, the legislation that allows it to happen exists, and the Law Society of Scotland has said it is looking at 2027 for implementation of the regulatory framework required to facilitate it.

“Assuming that deadline is met, that’s the point where we might see M&A activity within the Scottish legal sector really take off.”