Trend toward recovery should continue in 2013
NEW YORK, February 21, 2013 –Financial services mergers & acquisitions (M&A) will face both uncertainty and opportunities in 2013 due to several factors including increased regulatory costs, depressed organic growth, and the greater availability of attractive financing, a new report issued by PwC US reveals today. However, while 2012 proved to be a challenging year for announced deal activity in the financial services sector, there is some cause for optimism in 2013.
US banking, insurance, asset management, and other financial services deal activity in 2012 differed very little year over year from 2011. Announced transactions rose from 756 in 2011 to 768 in 2012, but deal value fell from $72.1 billion in 2011 to $62.4 billion in 2012. Deal volume is still down from pre-financial crisis levels.
“The past year has seen a stabilization in many of the challenges facing financial firms after the financial crisis of 2007-2008 such as uncertainty in asset quality and growth prospects, regulatory approvals, and integration of operations, as well as the large number of new regulations coming online,” said John Marra, PwC transaction services—financial services leader. “While obstacles remain, we expect these trends to continue to improve in 2013.”
According to the report:
Grounds for 2013 Optimism
“M&A desire remains high among buyers, and 2012 featured a significant amount of pre-deal activity. However, valuation gaps remain, and differences between buyer and seller perception of future profitability will continue to present a challenge,” Marra remarked. “At the same time, ongoing divestiture of non-core assets by major European institutions will drive deal activity into 2013.”
Banking: Opportunities Amidst Regulatory Uncertainty
Insurance: Momentum is Building, but Yield Concerns Remain
Asset Management: Strong Performance Signals Recovery
Other Financial Services: Continued Pressures May Signal More Consolidation
“Momentum seems to be building in M&A across a number of different sectors,” PwC’s Marra added, “However, it is important to remember that ongoing uncertainty could temper growth and recovery.”
The report, “A Cause for Optimism, in the Face of Uncertainty: 2013 US Financial Services M&A Insights,” is PwC transaction services 6th annual M&A analysis and outlook for the financial services sector. To obtain a copy, please visit http://www.pwc.com/us-financial-services-mergers-acquisitions-2013. To find out more about how PwC can you navigate regulatory complexity, visit www.pwcregulatory.com.
About PwC Deals Practice
PwC’s Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and then advise on the business-wide risks and value drivers in their transactions for more empowered negotiations, decision making and execution. Clients can then expedite their deals, reduce their risks, capture and deliver value to their stakeholders, and quickly return to business as usual.
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