2024 Outlook

Global M&A Trends in Financial Services

Global M&A Trends in Financial Services hero image
  • Insight
  • 9 minute read
  • January 23, 2024

Financial services M&A will continue to be challenging in 2024, but the need for financial institutions to transform should give dealmakers greater optimism.

Christopher Sur

Christopher Sur

Global Financial Services Deals Leader, Partner, PwC Germany

Many financial services (FS) dealmakers entered 2024 with a greater sense of optimism, reflecting on 2023 as a low point in which uncertainty created by macroeconomic factors such as high inflation, rising interest rates and lower economic growth projections dampened M&A activity. While macroeconomic conditions and geopolitical tensions remain challenging, recent gains in the financial markets and positive signals about interest rates from central banks are slowly inspiring the return of investor confidence.

Current market conditions—combined with necessary ongoing initiatives such as digitalisation, sustainability and workforce challenges—put pressure on FS players to accelerate their transformation to remain relevant and profitable. Besides internal measures, M&A continues to be an essential part of the transformation journey, especially as organic growth faces severe challenges in the current macroeconomic environment. M&A-related transformation steps may include acquisitions to enhance capabilities and drive future growth through economies of scale and scope. Alternatively, divestitures may help to improve operations and recalibrate business models.

The FS industry comes with its own set of additional challenges, due in part to its highly regulated and risk-averse nature, which makes it more difficult to successfully execute transformational measures. The challenging market environment creates a strong headwind for market participants to consider M&A transactions. We expect to see dealmakers favouring smaller transactions, rather than megadeals, to facilitate transformational steps. We also expect deal processes to last longer, with analyses becoming more complex.

“The current market is very challenging for all FS deal participants, but I firmly believe that now is the time—when others may be hesitating—to take advantage through acquisitions or disposals in order to solidify future positioning.”

Christopher Sur,Global Financial Services Deals Leader, Partner, PwC Germany

Spotlight on insurance brokerage

The commercial insurance brokerage market is an attractive sector for potential investors due to its non-cyclical nature, resilient demand and strong prospects for consolidation in what remains a highly fragmented market in many countries. The large number of small and midsize companies in the market creates opportunities for synergies and economies of scale and makes the commercial insurance brokerage an attractive market for investors looking for long-term investment opportunities with high margins and stable returns.

Private equity is a natural driver of consolidation efforts and has accounted for a significant share of insurance brokerage deals. While the trend toward insurance brokerage consolidation started around 20 years ago in the United States and United Kingdom, it shows no signs of slowing down. Many other countries are in the beginning stages of this market consolidation, and those in more mature domestic markets are looking internationally to grow.

In many countries in Europe, the Middle East and Africa (EMEA), acquisitions of brokerage firms by rivals and the growth of consolidators backed by private equity have led to significant M&A activity. In Germany, for example, Gossler, Gobert & Wolters (GGW), one of Europe’s leading brokerage platforms for small and medium-size enterprises, recently secured investment from Permira to support its acquisitive growth strategy in the highly fragmented German and European insurance brokerage industry. US insurance brokers have also continued along their consolidation journey, with domestic acquisitions such as Farmers Group’s announced acquisition of three US insurance brokers in November 2023 and Aon Plc’s proposed US$13.4bn acquisition of NFP, a leading middle-market provider of risk, benefits, wealth and retirement plan advisory solutions. Aon also announced plans to acquire an Indian insurance brokerage company, which will give it a presence in cities where it does not currently operate.

M&A hot spots in 2024

We expect the following areas to be hot spots for M&A activity in 2024:

  • Asset and wealth management: Asset and wealth managers facing decelerating organic revenue growth and shrinking margins will continue to use or intensify M&A to achieve scale or to acquire new capabilities, especially around sustainability, alternative assets and unique asset management specialists.

  • Insurance: Ongoing deal activity is expected in the insurance sector, with companies looking to divest complex legacy insurance portfolios with the aim of cutting costs and improving capital efficiency. The separation of the risk carrier and the asset management units of insurance companies continues to be under review by market participants. Furthermore, as noted in our sector spotlight on insurance brokerage, the ongoing consolidation of this highly fragmented market is underway and will continue to attract private equity investors.

  • Private equity: Investors with increasing specialisation in FS, dedicated FS teams and increasing fund volumes are focusing on FS and FS-related topics such as insurance brokerage, payments, platforms, fintech, insurtech and regtech. Hence, we expect to see further M&A activity in these areas. However, with PE investors facing greater pressure on returns due to the higher cost of capital and limitations regarding leverage, a focus on value creation will be more important than ever.

  • Payments: Despite the ongoing macroeconomic challenges and their implications on the M&A market, the payments sector remains highly attractive for many investors. Both private equity firms and banking and payments corporates view the payments business as scalable, less regulated and more profitable than other parts of the FS industry. Buy-and-build strategies are a popular way for PE firms to grow payments businesses.

  • Fintech: We see FS companies entering strategic partnerships with fintechs, new distribution partners and others to build ecosystems and further develop their business models. However, new capital and liquidity are increasingly difficult for many fintechs to access. Consequently, we expect some fintechs to be attractive takeover candidates and some to become the subject of distressed M&A. Others may simply fail and disappear.


of financial services CEOs are planning to make acquisitions in the next three years.

Source: PwC's 27th Annual Global CEO Survey

Key M&A themes for financial services in 2024


Overall credit quality is proving resilient despite considerable macroeconomic headwinds. However, should the challenging macroeconomic conditions persist, we may observe an increase in distressed assets held by banks, with an emphasis on those linked to commercial real estate. This may lead to more restructuring measures among FS players, such as divestments of non-core assets or non-performing loans (NPLs) to strengthen balance sheets and improve capital ratios in the banking sector.

Environmental, social and governance (ESG)

FS companies still face a high or even increasing pressure from regulators and stakeholders to reflect ESG criteria in their business decisions. Regulators expect ESG criteria to play a central role in the definition of strategies and business plans as well as in the risk appetite of the companies under their supervision. Other stakeholders—such as employees, customers, value chain partners, non-governmental organisations and the media—also consider ESG criteria important for the further development of FS companies. Hence, investors are also focusing more and more on these criteria when considering investment decisions and determining business strategies.

Digital transformation and technology

Digitalisation remains a strategic priority as FS players need to address consumer expectations and build market position against the backdrop of disruption from fintechs and non-FS companies. We expect that M&A, strategic partnerships and alliances in 2024 will focus on deals to leverage data, implement solutions to rising cybersecurity concerns, drive operational efficiencies, and speed up transaction processes.

M&A volumes and values in 2023

Financial services deal volumes and values, 2019-2023

Bar chart showing M&A volumes and values for the financial services sectors. Deal volumes and values in FS declined by 12% and 40%, respectively, between 2022 and 2023.

Sources: LSEG and PwC analysis

Global M&A volumes and values in financial services decreased between 2022 and 2023 by 12% and 40%, respectively. The strong increase in FS deals activities in 2021 and 2022, combined with rising interest rates and a number of related bank failures in early 2023 fuelling market uncertainty, not only in the banking sector but also across the FS sector and more broadly,  consequently led to a dampening effect on M&A in 2023. Deal volumes returned to the level of 2019 and 2020, but deal values were below prior years in 2023. The decline in deal values in 2023 reflects to some extent a trend of dealmakers using smaller transactions to achieve transformational steps instead of megadeals—considered here as transactions with a value in excess of US$5bn. The number of megadeals plummeted from 21 in 2021, to seven in 2022 and just three in 2023.

Global M&A trends in financial services

Dealmaking activity in the banking sector declined in 2023 due to uncertainties connected with bank collapses, interest rate developments and potential risks in loan books.

To overcome systemic challenges such as the lack of scale and the saturation in some segments in which competing banks have comparable business models, consolidation is viewed as somewhat inevitable. For example, regional and community banks in the United States are numerous, which presents an opportunity for consolidation as a means to grow and leverage scale. Expansion may help banks absorb anticipated increases in costs associated with meeting increasingly complex and tough regulations and higher capital requirements. Furthermore, larger institutions are more likely to have sufficient budgets to invest in technology and customer experience to compete with new market entrants such as fintechs and deep-pocketed consumer brands that are encroaching on the financial services industry.

In this context, a consolidation wave has long been anticipated. But it has not so far happened, because of several mitigating factors. These include a scattered regulatory landscape, difficulties integrating legacy infrastructures and realising synergies, high interest rates and embedded losses in target company bank loan and debt securities portfolios. Given high interest rates, the potential impact of absorbing such embedded losses has led to greater scrutiny from buyers and has made many buyers hesitant to transact. Furthermore, protracted timelines for regulatory approvals for bank M&A create a disincentive for potential buyers, many of whom have instead favoured other, more appealing growth strategies.

Overall, the insurance sector remains resilient in a challenging deals environment, with considerable deal activity relative to slowdowns in other sectors. In particular, we expect the following trends and topics to drive deals in the insurance sector now and in the future:

  • Insurance brokerage: We expect broker consolidation to continue in a highly fragmented market. As discussed in our spotlight section above, there is increased attention and demand from private equity investors acting as consolidators to benefit from economies of scale.
  • Portfolio optimisation: Insurance corporations continue to divest capital-intensive life and annuity businesses to focus on core products and reduce complexity in their operations. This gives insurers an opportunity to reduce costs, improve capital efficiency and redeploy capital to core activities.
  • Competition: New market players are disrupting existing value chains. The emergence of non-traditional competitors, including digital platforms and tech giants, puts pressure on established insurance providers.

  • Partnerships: Insurance companies are collaborating with insurtechs to leverage digitalisation efforts in areas such as machine learning and artificial intelligence (AI) capabilities.

The AWM industry is grappling with an unprecedented set of existential challenges. Areas such as digital transformation, shifting investor expectations, consolidation and ‘retailisation’, combined with market volatility and higher interest rates, rank high on the list of asset managers' and investors’ concerns. According to PwC’s ‘Asset and wealth management revolution 2023: The new context’ publication, 16% of existing AWM organisations are expected to be swallowed up or fall by the wayside by 2027. As the AWM sector overall is experiencing a deceleration in organic revenue growth and shrinking margins, focus and scale are of the essence. Hence, AWM companies are leveraging M&A to grow their businesses and capitalise on economies of scale and scope. The following factors are currently driving deals in the AWM space and are expected to continue doing so in the future:

  • Strategic partnerships: Firms are increasingly exploring strategic partnerships not only for revenue enhancement but also as a means of optimising cost structures. Such collaborations allow companies to capitalise on shared revenue opportunities while strategically streamlining back-end operations for efficiency gains and cost reductions.
  • Portfolio optimisation: The challenging macroeconomic market has led managers to focus on portfolio optimisation to drive profitability and higher valuations. Performing reviews of existing portfolios will help businesses identify where they should focus capital allocations and where to pull back to increase valuations and maximise overall profitability.
  • Diversification: Firms are responding to challenges by diversifying their product offerings through acquisitions, new distribution channels (including customer base) and new asset classes, and by enhancing product innovation.
  • Search for scale and leverage: Larger asset managers growing through acquisitions can leverage their scale to spread costs across a wider asset base, allowing them to be more agile in executing deals.

2024 M&A outlook for financial services

Despite a challenging market environment with a slowdown in deal activities throughout the financial services sector last year, we see potential for an uptick in M&A with an improved deal flow in the course of 2024. FS players remain under significant pressure to further transform their business models to meet current and future challenges and create sustained outcomes. M&A can serve as a catalyst for required transformational steps, either by acquiring businesses to drive future growth or by divesting less profitable or non-core businesses to sharpen the organisation’s operational focus.

Our commentary on M&A trends is based on data provided by industry-recognised sources. Specifically, overall deal values and volumes referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 December 2023 and as accessed on 3 January 2024. This has been supplemented with additional information from S&P Capital IQ and our independent research. Certain adjustments have been made to the source information to align with PwC’s industry mapping.

Christopher Sur is PwC’s global financial services deals leader. He is a partner with PwC Germany. Thorsten Egenolf is a senior manager with PwC Germany.

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