Insight

Financial services M&A cooled in the first quarter

After a record-setting 2021, financial services deal volume and deal value declined in Q1’22

Timothy Johnson

Timothy Johnson

Financial Services Industry Leader, Deal Advisory, KPMG US

+1 312-665-1048

James Brannan

James Brannan

Advisory Managing Director, Financial Due Diligence, KPMG US

+1 212-954-1987

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.

Contributing authors

Timothy Johnson

Timothy Johnson

Financial Services Industry Leader, Deal Advisory, KPMG US

+1 312-665-1048
Liam Kelly

Liam Kelly

Principal, Infrastructure, KPMG US

+1 415-932-9040
Jack Whitt

Jack Whitt

Principal, Advisory Strategy, KPMG US

+1 703-286-8807
James Brannan

James Brannan

Advisory Managing Director, Financial Due Diligence, KPMG US

+1 212-954-1987
Bob Ruark

Bob Ruark

Principal, Banking & Fintech Strategy Leader, KPMG US

+1 704-371-5271
Ronan Curran

Ronan Curran

Advisory Managing Director, Financial Due Diligence, KPMG US

+917-603-8913