The UK healthcare and education sectors entered 2025 facing significant operational, financial and regulatory change.
Healthcare providers continued to manage workforce shortages, rising costs and pressure on public services, while government investment created opportunities across diagnostics, digital health, virtual care and medical technology. In education, demand shifted towards skills-based learning, short-form qualifications, artificial intelligence and more flexible delivery models.
Against this background, merger and acquisition activity remained resilient. Strategic buyers and private equity investors continued to target fragmented markets where consolidation can improve scale, strengthen regional coverage and support investment in technology.
This review examines the economic environment, sector developments, public market valuations and UK healthcare and education M&A activity during the first half of 2025.
The UK economy grew by 0.7% during the first quarter of 2025. Growth was supported by services, manufacturing, household spending and an increase in exports ahead of anticipated tariff changes.
Momentum weakened during the second quarter, with GDP contracting by 0.3% in April. Businesses continued to face fiscal pressure, labour-market uncertainty and disruption to international trade.
Global growth forecasts were also revised downwards. The World Bank and Morgan Stanley projected global GDP growth of approximately 2.3% to 2.5% during 2025, compared with 3.5% in 2024.
The main causes of the slowdown included:
Global inflation was expected to ease to approximately 4.2% in 2025. However, tariff-related pressures remained a particular risk for sectors including pharmaceuticals, medical devices and electronics.
The UK Data (Use and Access) Act 2025 introduced changes to the UK’s data protection framework.
Healthcare and education organisations may need to review:
Artificial intelligence and automation are creating opportunities to improve clinical decision-making, administrative efficiency and personalised learning. However, their use also introduces additional compliance, data security and governance requirements.
Organisations operating internationally must monitor the legal requirements applying in every jurisdiction in which patient, learner or customer data is processed.
UK private equity and M&A volumes increased modestly year on year.
Activity strengthened between the first and second quarters of 2025, with further momentum anticipated during the second half of the year. Factors supporting activity included interest-rate reductions, pressure on private equity firms to deploy available capital, strategic expansion and greater clarity around valuations.
Corporate buyers completed approximately 62% of UK transactions during H1 2025, broadly in line with the two-year average of 63%.
Private equity buyouts accounted for approximately 31% of transactions, while growth capital investments represented a further 7%.
The report’s year-on-year deal activity chart compares transactions completed between Q3 2023 and Q2 2024 with those completed between Q3 2024 and Q2 2025.
Approximate transaction volumes were:
| Sector | Q3 2023–Q2 2024 | Q3 2024–Q2 2025 |
|---|---|---|
| Sustainability | 270 | 285 |
| Business Services | 800 | 790 |
| Software, Media & Technology | 650 | 620 |
| Manufacturing & Industrial | 485 | 575 |
| Healthcare & Education | 315 | 285 |
Healthcare and education deal volumes declined moderately year on year, although continued activity across fragmented subsectors demonstrated ongoing demand for consolidation and specialist capabilities.
Announced investment in the NHS is creating opportunities for traditional healthcare providers, medical technology companies and digital health businesses.
The government committed approximately £1.5 billion to expand surgical capacity through new surgical hubs and diagnostic equipment. The programme is intended to support an additional 1.2 million tests each year.
More than £2 billion was also committed to accelerating digital health innovation and modernising NHS systems and services.
Areas expected to benefit include:
Virtual care and diagnostic hubs are expected to be expanded nationally to reduce pressure on hospitals and improve patient access.
FemTech and AI-supported medical imaging were identified as areas with strong clinical and commercial potential.
A £30 million venture capital fund was launched in partnership with NHS trusts to support early-stage medical technology businesses.
The fund is managed by Meridian Health Ventures and is connected to institutions including:
The fund is targeting technologies capable of improving outcomes, reducing costs and achieving adoption across NHS or US hospital systems.
Demand for community mental health services continued to grow, with providers reporting increasingly complex patient needs.
Persistent staff shortages and employee burnout remained significant barriers to improving capacity and access.
These pressures may support further investment in:
The NHS has committed to achieving net-zero emissions by 2030.
Investment is therefore being directed towards:
These changes create opportunities for businesses serving the healthcare construction, infrastructure, energy management and technology markets.
Changes to healthcare regulation and scientific research funding in the United States created uncertainty for international healthcare businesses during H1 2025.
Companies selling into the US must navigate evolving requirements relating to:
The US administration introduced a 15% limit on indirect costs attached to National Institutes of Health grants. These costs had previously been calculated using documented expenses and were commonly between 30% and 50%.
Indirect costs typically support:
Cuts affecting the Office of Research and Development could result in fewer resources for early-stage research, slower innovation pipelines and fewer international collaboration opportunities.
A decline in US research capacity could eventually benefit European and Asian research centres. The UK may attract additional scientific talent, capital and commercial partnerships where investors seek a more stable research environment.
However, any transition is likely to take time, particularly while investor sentiment towards HealthTech remains unsettled.
The veterinary market faced increasing regulatory scrutiny during H1 2025.
The Competition and Markets Authority identified concerns around:
Many pet owners remain unaware that veterinary medicines can be purchased online, which may result in customers paying more through veterinary clinics.
End-of-life care was also identified as an area where limited competition could contribute to higher prices.
Stronger regulation is expected, although policymakers will need to consider the cost of compliance for smaller independent practices. Excessive compliance costs could create barriers to entry and further accelerate consolidation.
Education and training markets are shifting away from a sole focus on formal qualifications.
Employers are increasingly prioritising demonstrable competencies, practical experience and job-specific skills.
This supports demand for providers offering:
Demand is increasing for short, stackable qualifications that can be completed individually or combined into wider programmes.
These courses allow employers and employees to address specific skills gaps without committing to a full degree or long-term qualification.
Areas of growing demand include:
Generative AI and adaptive learning platforms are increasingly being used for:
AI-supported personalisation has been particularly useful in language learning, where platforms can adapt exercises and feedback to each learner’s progress.
Hybrid delivery is now widely established across further education and professional training.
Virtual reality and immersive technologies are also gaining traction in vocational and science, technology, engineering and mathematics education.
These tools allow learners to practise technical or safety-critical activities in controlled environments before applying them in real-world situations.
Education providers are increasingly embedding wellbeing and inclusive teaching frameworks into their services.
This includes support for:
Green skills and climate-related education are increasingly being incorporated into curriculums.
There is also growing demand for educators who can teach sustainability, environmental compliance and the practical skills required by lower-carbon industries.
The report tracks public market revenue and EBITDA multiples across HealthTech, managed care, training, hospitals and care centres, and EdTech.
HealthTech began 2025 trading at approximately 3.5 times revenue. Its multiple fell sharply during February and March and reached approximately 1.7 times during April, before recovering to around 2.1 times by the end of June.
The fall reflected declining investor confidence and uncertainty around which technologies will achieve sustained adoption.
Other subsectors remained comparatively stable:
HealthTech was excluded from the EBITDA analysis because a significant number of the companies in the sample were loss-making.
EdTech began the year at approximately 11 times EBITDA and rose to nearly 12 times in February. Its multiple subsequently declined and ended June at approximately 9.5 times.
Managed care remained comparatively stable at around 10 to 10.3 times EBITDA.
Training traded broadly between 8.5 and 9 times EBITDA, while hospitals and care centres generally traded between approximately 8 and 9 times.
Traditional healthcare providers remained sensitive to debt costs and interest rates. Bank of England rate reductions offered some relief, but M&A continued to be an important route to growth.
The report’s quarterly transaction chart shows that overall activity peaked during the final quarter of 2024 before declining in Q1 2025 and recovering during Q2.
Approximate total transaction volumes were:
| Quarter | Approximate transactions |
|---|---|
| Q3 2024 | 71 |
| Q4 2024 | 102 |
| Q1 2025 | 66 |
| Q2 2025 | 75 |
Hospitals and care centres represented the largest proportion of transactions during each quarter.
HealthTech was the second-largest contributor, while EdTech, training and managed care represented smaller shares of activity.
Mergers and acquisitions accounted for the majority of transactions. Buyouts and growth capital investments represented smaller but meaningful proportions of the market.
Private equity firms continued to invest in fragmented healthcare markets, including:
These are often labour-intensive sectors facing increasing operational costs. Consolidation can improve purchasing power, administration, technology investment and regional coverage.
Cross-border deal activity also increased as international investors continued to recognise the UK’s strength in healthcare innovation.
Oxford and Cambridge research ecosystems remain attractive because of their:
Consolidation in the nursery sector continued as operators responded to rising costs and pressure on margins.
Buyers sought to expand regional footprints and achieve economies of scale across staffing, property, administration and procurement.
Medium-sized nursery groups increased their share of nursery acquisitions from 5% of transactions in 2023 to 19% in 2024.
Further consolidation was expected during 2025. In Christie & Co’s annual sentiment survey, 62% of childcare and education providers said they were planning to buy or sell during the year.
The following investors, acquirers and portfolio companies were active during H1 2025.
| Investor or acquirer | Target | Date | Deal type |
|---|---|---|---|
| AKKR | CareLineLive | 1 April 2025 | Buyout/LBO |
| YFM Equity Partners | Audiological Science | 24 February 2025 | Buyout/LBO |
| Foresight | NorthWest EHealth | 1 April 2025 | PE growth/expansion |
| Investor or acquirer | Target | Date | Deal type |
|---|---|---|---|
| Foresight | Functional Gut Clinic | 2 April 2025 | PE growth/expansion |
| BGF | Connected Health | 20 January 2025 | PE growth/expansion |
| BGF | OCL Vision | 26 February 2025 | PE growth/expansion |
| Scottish Dental Care, supported by BGF | Musselburgh Dental Clinic and Implant Centre | 2 April 2025 | Buyout/LBO |
| Bira Care Homes | Field Farm House Residential Home / Hereford Living | 14 April 2025 | Merger/acquisition |
| Expanding Horizons | Enable Care Services | 22 May 2025 | Merger/acquisition |
| Investor or acquirer | Target | Date | Deal type |
|---|---|---|---|
| Expanding Horizons | Cupcakes ‘N’ Dinosaurs | 1 April 2025 | Merger/acquisition |
| Investor or acquirer | Target | Date | Deal type |
|---|---|---|---|
| Achieve Partners | Wise Music Group’s digital education business | 9 January 2025 | Buyout/LBO |
| OneTouch, supported by August Equity | Qintil | 25 June 2025 | Buyout/LBO |
BGF and August Equity are identified in the report as add-on sponsors for the relevant transactions.
Software Circle acquired Total Drive Software on 14 March 2025.
OrganOx completed a £113.7 million growth investment on 24 February 2025.
Investors included:
Synergy LMS was acquired by K Bro Linen on 13 May 2025.
Antev was acquired by Medicus Pharma on 28 April 2025.
VitalHub acquired Induction Healthcare Group on 10 April 2025.
Charac completed a growth investment on 3 April 2025.
Foresight Group invested in NorthWest EHealth on 1 April 2025.
InvAscent invested in Geri Care Health Services on 25 January 2025.
Foresight Group invested in Functional Gut Clinic on 2 April 2025.
Optima Health acquired Care First on 6 May 2025.
Whalar acquired The Business of Creativity on 28 May 2025.
Healthcare and education remain attractive markets for buyers, but investor appetite is becoming increasingly selective.
In traditional healthcare, pressure from staffing costs, debt and regulation is encouraging consolidation. Buyers are likely to favour providers with strong local positions, reliable management teams and clear opportunities to improve operational efficiency.
HealthTech and EdTech present greater growth potential, but valuations increasingly depend on evidence of adoption, customer retention and a credible route to profitability. Investors are distinguishing between technologies that create measurable benefits and those supported primarily by market enthusiasm.
Businesses likely to attract interest include those offering:
Polestar Corporate Finance advises business owners, management teams, investors and corporate acquirers across the UK healthcare and education sectors.
Our team supports clients with:
Contact the Polestar Corporate Finance team to discuss your objectives.
