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In this IMAP M&A Industry Insights video, Richard Tunney from Key Capital (IMAP’s partner in Ireland) and Andrew Kemper from Capital West Partners (IMAP’s partner in Canada) talk about the four factors impacting M&A in the Financial Services sector in 2024.
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Trend 1. Private Equity returning to market and growing interest in Financial Services
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 is an attractive sector due to low cap-ex, cash generation, and long-term client relationships.
Trend 2. Insurance is leading the way in Financial Services with continuing trade and PE interest
While deal volume was down in 2023, 600 deals valuing $20 billion were closed, with the AON takeover of NFP accounting for $13 billion in enterprise value alone.
Trend 3. Regulation is driving consolidation
Regulatory burden impacts smaller businesses, driving consolidation.
In Ireland, the UK, and across the EU, the regulatory burden continues to grow. Smaller businesses are forced to scale-up compliance teams and risk management are seeing their net margins impacted.
The interest rate environment has been transformative for cash generation over last 18-24 months.
Trend 4. There is growing pressure for banks to use expanding cash piles driven by interest rates
Exponential net interest margin growth in Irish and UK banks is causing shareholder pressure for capital distribution or M&A.
Large banks in Canada have consolidated market share showing less concern regarding competition and opportunities for M&A.
“We’ve seen a significant increase in Private Equity appetite to build a portfolio in financial services and also private equity funds specifically aimed at the financial services sector and we see that trend continuing.”Richard Tunney, Managing Director at Key Capital
Key Capital is the exclusive Irish member firm of IMAP, an International Mergers and Acquisitions Partnership of more than 450 M&A professionals in over 50 countries. IMAP has closed over 2,200 transactions valued at $130bn in the last 10 years and is consistently ranked in the world’s Top 10 M&A advisors (source: Refinitiv) for mid-market transactions.
Contact Us
For further information about how Key Capital Corporate Finance can help you, please email or call Richard Tunney in confidence.
Email: richard.tunney@keycapital.ie
Phone: +353 1 638 3838