The UK Software, Media & Technology (SMT) sector continued to demonstrate resilience during the first half of 2025, supported by ongoing investment in artificial intelligence (AI), software, data analytics, fintech and digital infrastructure.
Polestar Corporate Finance’s Software, Media & Technology H1 2025 Sector Review explores the latest developments affecting mergers and acquisitions (M&A), private equity investment, valuation trends and transaction activity across the UK technology market.
The report also examines the macroeconomic environment, regulatory developments, AI policy, public market valuations, private transactions and notable investment activity shaping the sector.
Despite a more challenging global economic backdrop, the UK technology sector continued to benefit from sustained investment and innovation.
During H1 2025:
Artificial Intelligence continued to be one of the most significant themes across the UK technology market.
The report highlights:
The regulatory landscape continued to evolve throughout H1 2025.
Key developments include:
Businesses operating internationally are expected to monitor changing legislation across multiple jurisdictions.
Cybersecurity remained a significant area of focus across the technology sector.
The proposed UK Cyber Security & Resilience Bill expands regulation across digital services and supply chains, introduces mandatory incident reporting and provides regulators with enhanced enforcement powers.
The report also notes that approximately 65% of global organisations now deploy AI tools within their operations, increasing both opportunities and compliance considerations.
The telecommunications sector continues to evolve beyond traditional network services.
Key developments highlighted in the report include:
The report reviews valuation trends across several software and technology subsectors, including:
During H1 2025:
Private transaction activity remained resilient despite wider market volatility.
The report highlights several factors supporting continued investment:
Drawing on SaaS Capital’s 2025 Private Company Benchmarking Report, the review highlights several trends affecting software businesses.
These include:
The report identifies a number of investors active across the Software, Media & Technology sector during H1 2025, including:
These investors have supported transactions across software, telecommunications, fintech, digital media and data analytics businesses.
The report highlights recent activity across a range of software and technology businesses, including transactions involving:
These transactions illustrate continued activity across software, fintech, AI, digital media, e-commerce and telecommunications.
The UK Software, Media & Technology sector remained one of the country’s most active M&A markets during H1 2025. Transaction activity strengthened through the first half of the year, supported by strategic corporate buyers, private equity investment and continued demand for software, AI and data-driven businesses.
The report highlights continued investment across:
AI and software businesses continue to benefit from significant venture capital investment, government support and corporate adoption.
Yes. Private equity remains active across the UK technology sector, with ongoing buy-and-build strategies and investment into software, telecommunications, fintech, digital media and data analytics businesses. The report highlights several active investors and recent transactions completed during H1 2025.
Artificial Intelligence continues to be one of the fastest-growing areas of the UK technology sector. During H1 2025, the UK AI market was valued at approximately £180 billion, with UK AI startups raising £1.6 billion in venture capital. Government initiatives including the Sovereign AI Unit and AI Growth Zones are also supporting continued sector growth.
Key trends identified in the report include increasing AI adoption, evolving cybersecurity regulation, continued investment in telecommunications infrastructure, stronger demand for software businesses with recurring revenue and ongoing cross-border investment into UK technology companies.
Polestar Corporate Finance advises software, media and technology founders, shareholders, management teams and investors on company sales, acquisitions, fundraising, management buyouts, business valuations and strategic corporate finance across the UK technology sector.
