Financial Services

Financial service companies in 2021 used M&A as the main tool to digitize platforms, optimize cost structures, enhance ESG offerings, progress toward their net-zero targets, and grow revenues. Gaining strategic advantage and transforming businesses was a top priority for dealmakers, thus signaling a positive outlook for 2022 as these trends will persist.

 

Buyers are laser-focused on acquiring digital and financial technology (fintech) assets, most notably in the insurance technology (insurtech), regulation technology (regtech), payments, financial services IT, and cryptocurrencies spaces, to keep pace with aggressive technology adoption among consumers and businesses.

 

The rationale for such transactions is either to gain exposure to a hypergrowth market to drive returns, or to digitize business models. Capital markets entities are acquiring regtech platforms to assist with navigating compliance and regulation. Insurers continue to focus on IT innovation to automate parts of the customer lifecycle, from renewals to claims. Investment banks continue to expand into cryptocurrencies through trading and research. And private capital groups are targeting buy-now-pay-later platforms, especially in Europe, as the model gains traction as a hypergrowth niche.

 

* According to Pitchbook’s 2021 Global M&A Report

FCL Industry Coverage

 

  • Specialty Lenders
  • Wealth Management
  • Asset Management
  • Private Equity
  • FinTech

M&A Activity

Q4 activity in 2021 showed a slight increase of 2%, compared to Q4 of 2020, with 1,736 deals closed. The increase was led primarily by an incredibly robust IPO market with 372 companies filing for initial public offerings. In addition, Q4 of 2021 brought 10% increase in Venture Capital deals, compared to Q4 of 2020. Overall, 2021 exhibited a 20% larger number of deals closed, compared to year 2020. Venture Capital buyers were the most active investors in Q4 representing 32.4% of the total deals closed.