M&A activity in financial services—banking, capital markets and insurance—reached a new high in 2021, as deal value soared 106 percent to $1.1 trillion from $557.8 billion in 2020. Deal activity gained momentum during the year and Q3’21 had the highest jump – a 6 percent increase in volume and 39 percent increase in value. Although deal volume grew five percent in Q4’21, deal values dropped by 37 percent. (See charts below for more)
Despite the fourth quarter slowdown, several trends stood out in a record year:
- Two macro factors helped fuel the explosion: rock-bottom interest rates and a rush to close deals ahead of anticipated changes in corporate taxation
- In banking, consolidation, geographical expansion and the pursuit of scale drove M&A
- Capital markets deal making was strongest in real estate, asset management and leisure facilities; top deals were in REITs and SPACs, continuing their meteoric rise
- In insurance, companies focused on growth by adding scale or shedding slower-growing, non-core units
Looking ahead, our view for financial M&A in 2022 is positive. While we expect inflationary pressures to stay elevated at least into the early months and for interest rates to rise, higher rates are favorable for banks, insurers and other lenders. The quest for growth should continue as well. In KPMG’s latest annual survey of M&A sentiment, 75 percent of financial services C-Suite respondents said their appetite for deal making had risen since before the pandemic.
FS Deal Volume and Deal Value
Capital Markets Deal Volume and Deal Value
Banking Deal Volume and Deal Value
Insurance Deal Volume and Deal Value
Our Q4’21 report unpacks these trends and what’s ahead—including deep dives on three topics:
Download the full report to uncover what is happening in these dynamic sectors, how deals are being done today—and why.