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David Jasmund

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Industry Trends

Dealmakers Eyeing a Boom in Financial Services M&A

Financial services dealmakers are more optimistic in 2024, viewing 2023 as a low point for M&A activity due to uncertainty from macroeconomic factors like high inflation and rising interest rates. Despite ongoing challenges, recent market gains and easing interest rate concerns are boosting investor confidence. However, pressures to accelerate transformation in areas like digitalization, sustainability, and workforce issues mean M&A remains crucial for growth, with a focus on smaller deals and potentially longer, more complex transactions.1

Fed Rate Cuts Expected Throughout 2024

With projected Federal Reserve cuts, the federal funds rate is expected to decrease to 4.00%-4.25% by year-end in 2024. This reduction stimulates economic activity, fostering investment and consumer spending. Lower borrowing costs support sectors like housing, enhancing mortgage affordability and driving demand. Reduced financing expenses benefit businesses, potentially leading to expansion and job creation. This easing monetary policy creates a favorable environment for economic growth and recovery throughout the year.2

Insurance Companies Employ Dual M&A Strategy

In 2024, the insurance industry sees a pronounced trend of mergers and acquisitions (M&A) aimed at bolstering core operations and acquiring specialized skills. Both insurers and intermediaries are engaging in M&A activities to enhance their market position and fill product gaps. Simultaneously, there's a strategic focus on divesting non-core assets to streamline operations and unlock value. This dual approach reflects a concerted effort to optimize portfolios and capitalize on emerging opportunities, driving dynamic shifts within the sector.3

Scaling up through Mergers of Equals in the Banking Sector

Amid subdued stock valuations, US banks are increasingly turning to mergers of equals (MoEs) to bolster scale and competitiveness. The recently announced $229.9 million merger between Southern California Bancorp and California BanCorp reflects this trend, marking the eighth-largest US bank M&A deal since 2023. With MoEs hitting a three-year high in 2023, banks find MoEs as a strategic avenue to navigate challenges in attracting buyers at attractive premiums, signaling a significant shift in the M&A landscape.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Luther Burbank Corporation
  • WaFd, Inc
  • $654.00
  • Roar Joint Venture, LLC
  • F&G Annuities & Life, Inc.
  • $359.00
  • Bamboo Ide8 Insurance Services, LLC
  • White Mountains Insurance Group, Ltd. 
  • $297.00
  • Community Financial Group, Inc.
  • Glacier Bancorp, Inc. 
  • $84.00
  • Connected Risk Solutions, LLC
  • AmWINS Group, Inc.
  • $59.00
  • Rockhold Bancorp
  • Equity Bancshares, Inc. 
  • $44.00
  • Protective Life portfolio of Protective Life Insurance Company
  • Sonida Senior Living, Inc. 
  • $40.00
  • Denver Bankshares, Inc.
  • MidWestOne Financial Group, Inc. 
  • $33.00
  • Mars Bancorp, Inc.
  • NexTier Incorporated
  • $32.00
  • CBOA Financial, Inc.
  • Bancorp 34, Inc. 
  • $30.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Insurvia, LLC
  • BharCap Partners, LLC
  • n/a
  • Unified Life Insurance Company
  • Obra Capital, Inc.
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • FG Financial Group, Inc.
  • Fundamental Global Inc. 
  • $28.72
  • Wake Forest Bancshares, Inc.
  • Piedmont Financial Holding Company
  • $14.95
  • Oakmont Capital Holdings, LLC
  • JA Mitsui Leasing USA Holdings, Inc.
  • $4.30
  • Mutual Savings Bank
  • Oconee Federal Financial Corp.
  • $3.57
  • JBL Trinity Group, Ltd.
  • World Insurance Associates LLC
  • n/a
  • Annuity Contracts of F&G Annuities & Life, Inc
  • Unisys Corporation 
  • n/a
  • First Founders Assurance Company
  • Trisura Group Ltd. 
  • n/a
  • Assets of Onecap Services LLC
  • HUB International Limited
  • n/a
  • Assets of Preferred Services Group, LLC
  • HUB International Limited
  • n/a
  • Harpenau Insurance, Inc.
  • Henriott Group, Inc.
  • n/a

 

Source S&P Capital IQ as of 4/11/2024 and PCE Proprietary Data

PCE Transactions

Contacts

David Jasmund

Orlando Office

407-621-2111 |

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Michael Poole

Orlando Office

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Kyle Wishing

Atlanta Office

404-994-4186 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. Sur, C. “Global M&A Trend in Financial Services.” PWC, January 23, 2024.
  2. 2. Caldwell, P. “When Will the Fed Start Cutting Interest Rates?” Morningstar, April 1, 2024.
  3. 3. Foster, M. “What M&A trends will transform the 2024 insurance landscape?” Norton Rose Fulbright, February 2024.
  4. 4. S&P Global “Bank M&A 2024 Deal Tracker: 10 deals announced in January.” S&P Global Market Intelligence, February 9 2024.

 

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