M&A activity in financial services (FS) cooled in the first quarter of 2022 after a record-setting 2021. Overall FS deal volume fell 27 percent to 1,702 from 2,344 in 2021’s fourth quarter and deal value fell 22 percent to $176.7 billion from $225.4 billion.
U.S. FS activity by sector
Strategic* and PE FS deals
*includes SPAC deal volume and values
Several factors contributed to the drop-off, including deal fatigue, the spread of the Omicron COVID variant, inflation and higher interest rates, and ongoing global supply-chain problems. The outbreak of war in Ukraine—and its disruptive economic implications—injected even more uncertainty.
Notable Q1’22 developments in FS deal-making included:
- Banking. Deal activity in banking fell primarily due to a decline in the number and size of megadeals.
- Capital markets. Real estate was the busiest category, accounting for 74% of deals in which capital markets firms were the target.
- Insurance. The number of insurance deals dropped 25%, but deal value surged 40% due to Berkshire Hathaway’s purchase of conglomerate Alleghany Corp. for $11.6 billion.
Looking ahead, we’re optimistic about FS. In our view, the first quarter decline in M&A was an understandable reaction to the headwinds pushing against investor sentiment. Farther out, we expect the pace and volume of deal making to pick up, as the strategic trends driving deal activity are robust and unlikely to weaken anytime soon. In addition, private equity funds have $1.8 trillion in dry powder that they’re eager to spend on FS transactions.
Our Q1’22 report unpacks these trends and what’s ahead—including deep dives on two topics:
Download the full report to uncover what is happening in these dynamic sectors, how deals are being done today—and why.