European Financial Services M&A hit nine-year high in H1
Although the total disclosed deal value for the period fell year-on-year, from £29.2bn in H1 2022 to £20.9bn in H1 2023, due to a decrease in the number of deals over £1bn
The European financial services industry announced a nine-year deal high in the first half of 2023, with 382 deals across the region, compared with 337 in the same period in 2022, a 13% year-on-year rise, according to the latest EY financial services M&A analysis.
The number of European insurance deals increased from 106 in H1 2022 to 131 in H1 2023, accompanied by a fall in total deal value: from £7bn in H1 2022 to £4.2bn in H1 2023.
Although the total disclosed deal value for the period fell year-on-year, from £29.2bn in H1 2022 to £20.9bn in H1 2023, due to a decrease in the number of deals over £1bn.
European wealth and asset management deal numbers rose from 92 in H1 2022 to 126 in H1 2023. However, the overall publicly disclosed deal value decreased from £3.8bn to £3.0bn year-on-year.
In contrast, the European banking sector reported a year-on-year deal volume fall in H1 2023, with 125 deals this year, down from 139 in H1 2022, and total deal value decreased year-on-year from £18.5bn to £13.7bn.
The number of non-European firms acquiring European targets was down from 53 in H1 2022 to 42 in H1 2023, and the total value fell from £11.6bn in H1 2022 to £2.4bn in the same period in 2023. European firms acquiring targets from other markets fell from 31 in H1 2022 to 24 in H1 2023, with deal value decreasing from £4bn to £1.6bn.
Benoit Gérard, EY EMEIA financial services strategy and transactions leader, said: “While financial services M&A activity across Europe appears to have had a strong start to the year – reaching a nine-year deal volume high – overall deal value has fallen 28% year-on-year.
“Amid a turbulent six months in the European financial sector, we have seen fewer large deals completed and an increase in smaller bolt-on acquisitions. It remains an uncertain market environment, with ongoing high inflation and rising interest rates impacting operational and funding costs, and within an M&A context, valuations and appetite, and we expect lenders and dealmakers to continue showing signs of caution in the short term.”
Gérard concluded: “M&A activity continues to provide an answer for many European firms looking for growth and economies of scale on the one hand or to refocus and simplify their portfolio on the other hand.
“While market turbulence and an ongoing high inflationary environment make deal-making more challenging in the short term, these same factors should eventually drive acquisition and consolidation activity. M&A activity is also likely to be supported by private equity firms that continue to focus on financial services investment and balance sheet-light businesses.”
