The Top Four Trends Affecting Mergers And Acquisitions In The Financial Services Industry In 2024

In the first of our new IMAP M&A Industry Insights video series, we hear from Richard Tunney and Andrew Kemper who take a deep dive into the Financial Services Industry and outline the Four Key Trends affecting M&A activity in the sector this year:

Trend 1. PE Involvement in Financial Services Deals Increasing Globally

• Increasing investment by Private Equity, particularly in areas such as insurance and non-bank lending
• Cash generation and barriers to entry are key drivers - particularly regulation and market penetration
• Insurance sector very attractive - low cap-ex, cash generation nature of businesses, and long-term client relationships

Trend 2. Growing Number of Transactions in the Insurance Segment

• While deal volume was down in 2023, 600 deals valuing $20 billion were closed
• The AON takeover of NFP accounted for $13 billion in enterprise value alone

Trend 3. Regulation Forcing Consolidation

• Regulatory burden impacts smaller businesses, driving consolidation
• In Ireland, the UK, and across the EU, the regulatory burden continues to grow
• Smaller businesses forced to scale-up compliance teams and risk management see their net margins impacted
• Strategics generate cash, creating opportunities for M&A
• Interest rate environment has been transformative for cash generation over last 18-24 months

Trend 4. M&A an Attractive Solution for Banks Sitting on Cash

• Exponential net interest margin growth in Irish/UK banks causing shareholder pressure for capital distribution or M&A
• Large banks in Canada have consolidated market share; less concern regarding competition and opportunities for M&A

Andrew Kemper

Partner

Capital West Partners - IMAP Canada

Richard Tunney

Managing Director Corporate Finance

Key Capital - IMAP Ireland