The UK has long been seen as a safe haven for foreign investment, in the main due to our stable Government, robust legal framework and the strength of our financial and professional services industry. With three trade deals recently signed with the USA, India and the EU, businesses in the UK have greater access to a variety of markets.
The UK has emerged as one of the most attractive global destinations for international investment, according to PwC’s 28th Annual CEO Survey. For the first time in the survey’s history, the UK ranks second only to the United States, surpassing Germany, China and India as a preferred market for capital expenditure. This growing confidence reflects a stronger economic outlook, with 61% of UK CEOs anticipating growth over the next 12 months, compared with 39% the previous year.
The survey also highlights the UK’s increasing focus on innovation and technology, particularly in the adoption of generative AI, where 93% of UK CEOs report having implemented it to some extent. As global leaders seek new sectors and opportunities to remain competitive, these findings reinforce the UK’s position as a key destination for strategic investment and long-term growth.
Risk Allocation and Legal Protections in the UK
For overseas buyers unfamiliar with the UK system, confidence in the legal framework is a decisive factor in pursuing acquisitions. Warranties and indemnities play a central role in this process, offering contractual assurances about the state of the target business and allocating risk fairly between buyer and seller. Warranties cover a wide range of matters – from tax compliance and financial accuracy to commercial contracts and regulatory approvals – while indemnities provide compensation for specific, identified risks.
Read: Warranties and Indemnities in M&A: What’s the Difference?
These mechanisms are a standard feature of UK M&A and are well recognised by advisers, lenders, and investors worldwide. Their routine use makes the UK a particularly safe and transparent environment for cross-border deals. In addition, warranty and indemnity insurance has become increasingly popular in transactions involving foreign entities. This cover can remove uncertainty around enforcement, allowing claims to be pursued directly against the insurer rather than across jurisdictions. For international investors, this added layer of protection enhances deal security and makes the UK one of the most attractive markets for acquisition-led entry.
Key Drivers of Acquisition
For foreign entities considering entry into the UK market, the barriers to establishing a business from the ground up can be formidable. Visa requirements, complex structuring, and the need to register with Companies House as an overseas entity add layers of bureaucracy before trading can even begin. Beyond these procedural hurdles, cultural differences and a lack of local market knowledge can make organic growth particularly risky.
When combined with traditional barriers to entry – such as high capital demands, strict regulation, and sector-specific expertise – the case for acquisition becomes stronger. By purchasing an established UK business, overseas buyers can sidestep the cost and uncertainty of building from scratch.
The acquisition provides immediate access to assets, licences, staff, and customer relationships that would otherwise take years to establish. In effect, buying becomes not just the faster route, but often the only practical way for foreign entrants to secure a foothold in a competitive or highly regulated sector.
Government Policies and Sector Opportunities
Now that a number of government policies are clearer, it is worth considering some of the key aspects impacting on potential business investors. For example, you might be considering acquiring a medical manufacturing business due to the life sciences receiving higher R&D attention from the government twinned with the aforementioned export deals, or buying a construction business due to the increase in capital spending.
The Bank of England’s monetary policy decisions continue to play a crucial role in shaping investor confidence and market conditions across the UK. Periods of rate adjustment, whether easing or tightening, influence the cost of borrowing, business investment appetite and the overall attractiveness of the UK as a destination for capital. Combined with targeted government measures and sector-specific support, these policies help define the environment for strategic acquisitions and highlight which industries are best positioned to deliver strong returns.
Foreign Direct Investment (FDI) Inflows
According to the House of Commons analysis on FDI, the value of FDI into the UK, specifically inward flows, was £1.3 billion in 2023, a significant drop from £22.9 billion in 2022. This follows a trend of declining inward FDI flows, which have generally fallen since reaching a high of £192 billion in 2016. The ONS has noted that FDI data for recent years (2021-2023) should be interpreted with caution due to changes in how the data is processed.
Despite the decline in inward flows, the total value of foreign-owned assets in the UK, known as inward FDI stock, was £2.1 trillion in 2023. This figure shows a slight increase from the previous year, demonstrating the overall long-term value of foreign investment in the UK economy. The UK’s inward FDI flows as a percentage of GDP have also generally fallen since 2016, dropping from 9.6% in 2016 to 0.05% in 2023. The average over the past 10 years has been 2.5%.
The source of inward FDI into the UK varies significantly by country. In 2023, Luxembourg was the single largest investor, with an investment of £18.3 billion. Inward investment from the USA was £1.6 billion in 2023, a considerable decrease from £26.5 billion in 2022. Additionally, net investment from the EU was £16.5 billion, a notable turnaround from a net disinvestment of -£29.1 billion in 2022. It is important to remember that negative flows, such as the disinvestment from Ireland of -£27.6 billion, can indicate that outflows of investment exceeded inward flows.
The origin of FDI to the UK is shifting. Our in-house data analysis service, Altius Business Intelligence, has identified* notable increases from 2024 to 2025 in buyers originating from; Belgium (1.09% to 1.32%), Canada (2.9% to 3.97%), Finland (1.27% to 1.99%), Germany (4.71% to 5.3%), Ireland (4.35% to 7.62%), Italy (1.99% to 2.32%), Japan (0.18% to 1.32%) and the USA (32.07% to 34.77%).
*Percentages are of a whole of all countries
Costs to Buying a UK Business
Foreign investors should be prepared for a range of acquisition costs that go beyond the purchase price itself. Stamp Duty Land Tax (SDLT) is payable on property elements of a deal, and rates have risen in recent years, increasing the upfront burden for buyers. In addition, there are professional fees for solicitors, accountants, due diligence providers, and corporate finance advisers. Regulatory costs, such as registering with Companies House or obtaining sector-specific licences, can also add to the overall expense. These costs vary depending on deal size and sector, but they are a consistent factor that buyers should budget for early in the process.
Operating costs should also be considered when weighing the long-term value of acquisition. Higher corporation tax rates, employer National Insurance contributions, and increased energy or compliance costs can impact profitability. However, many foreign investors see these as manageable within the wider benefits of entering a stable and transparent market. When balanced against the time, risk, and capital required to establish a business from scratch, the acquisition route remains a compelling option, with transaction costs often representing an acceptable price for certainty, immediate market entry, and access to established revenue streams.
World-Class Talent from UK Universities
The UK is home to some of the world’s leading universities, producing a steady pipeline of highly skilled graduates. For foreign investors, this means direct access to exceptional talent across technology, science, healthcare and finance.
With universities driving innovation and research partnerships, investors benefit from both a top-tier workforce and opportunities to collaborate on cutting-edge developments. Combined with the UK’s pro-business environment, this talent base provides foreign investors with a reliable foundation for growth, expansion and long-term success.
Companies House Registration
When buying a UK business as a foreign entity, it is also important to be aware of property and land ownership rules.
Under the Economic Crime (Transparency and Enforcement) Act 2022, any overseas entity that wishes to buy, sell, or transfer UK property or land must first register with Companies House and disclose its registrable beneficial owners or managing officers. Once registered, the entity receives a unique Overseas Entity ID, which must be provided to the Land Registry when carrying out transactions such as purchases, sales, transfers, leases, or charges. These rules place a clear obligation on overseas entities to report and maintain accurate information about their beneficial ownership. This can be done on the government website.
Any appointment of new directors must also be formally registered with Companies House to ensure compliance with statutory requirements.
The UK has extremely stringent financial compliance stipulations. Company directors that flout these laws can find themselves fined, in prison and banned from taking a directorship or compliance role in a company in the UK.
Data Protection
When buying a UK business as a foreign entity, particular attention must be given to enquiries around data protection. Since Brexit, the UK has operated its own GDPR regime, which differs from that of the European Union.
In the event of a data breach, UK regulators retain the power to investigate and impose penalties years after the acquisition, even once indemnities have expired. Several non-UK domiciled investors have already been caught out under these rules and forced to pay substantial fines.
Due Diligence
Just like any buyer in the UK, a foreign buyer of a business should conduct thorough due diligence in line with best practices in the UK. These include undergoing AML and funding checks on the buyer’s side and proper analysis of business fundamentals of the firm being sold.
For more information on due diligence read more here.
The Right Network of Businesses for Sale
If you are a foreign company looking to buy a business in the UK, finding the right business sales advisor is key. Altius Corporate Finance is part of the Altius Group, a group that consistently ranks in the top 5 business brokers across the UK’s regions.
Our more than 40-year history of mergers and acquisitions in a diverse range of sectors makes ACF an ideal partner for your next acquisition, whether that be as; a new entrant to a market, a bolt-on to a larger organisation or a merger of equals.
The businesses that we represent have undergone thorough due diligence checks, maintain up-to date financials and possess strong track records of growth. Contact Altius Corporate Finance today to find the perfect opportunity for you.
