Industry Trends
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
Advised Western Milling in their sale to the Western Milling ESOP Trust
Executive Summary
The Banking, Finance, and Insurance sector recorded 772 closed M&A transactions (LTM) in Q1 2025, up from 690 in Q1 2024, signaling renewed deal flow but still below pre-2022 activity levels. Strategic buyers led the market, accounting for 97% of deal volume, while financial buyers remained selective in a cautious investment climate. Valuation multiples shifted, with median TEV/EBITDA easing to 11.0x and TEV/Revenue remained the same at 1.4x, reflecting investor emphasis on earnings visibility and operational resilience. This report explores the trends, transactions, and emerging dynamics influencing the sector.
Market Dynamics
Valuation multiples in Q1 2025 continued their downward trajectory as buyers responded to tighter credit conditions and greater scrutiny on earnings quality. Median TEV/EBITDA fell to 11.0x from 13.3x in Q1 2024, while TEV/Revenue remained the same at 1.4x, both reflecting a move away from aggressive growth narratives. Premium pricing remained concentrated in deals involving scale efficiencies, regulatory expertise, and essential service providers within financial infrastructure.
Buyer Landscape
Strategic Acquirers: Strategic buyers led the market, driving 747 of the 772 closed transactions. In the banking sector, strategic buyers pursued scale and regional expansion, as evidenced by headline deals like Heartland Financial’s $2.1B acquisition of UMB Financial and Independent Bank’s $2.0B deal for SouthState Corporation. In the insurance space, strategic players remained active, primarily consolidating brokerages and reinsurers to deepen distribution networks and diversify offerings.
Financial Buyers: Financial buyers accounted for 25 transactions, reflecting a more selective approach in the current market environment. Financial firms attracted buyers seeking scalable advisory or consulting platforms, exemplified by TowerBrook’s investment in Berkeley Research Group. In the insurance sector, private equity activity was driven by a focus on retirement, annuity, and insurance services platforms, such as Apollo and Athene’s investment in Advantage Retirement Solutions.
Industry Comparison
In the first quarter of 2025, the Banking, Finance, and Insurance sector exhibited a mixed performance in M&A activity. While certain areas showed resilience, the overall landscape was marked by cautious optimism amid evolving economic conditions.
Geographic Expansion
Top U.S. States: California led with (91) transactions, followed by Texas (62) and New York (46), highlighting the strength of key financial hubs and regional market activity.
Cross-Border Trends: U.S.-based targets remained dominant, with continued interest from Canadian and global buyers, reflecting the ongoing international appetite for U.S. financial services and infrastructure assets.
Notable Transactions
Largest Transactions Closed
| Target | Buyer | Value ($mm) |
| Heartland Financial USA, Inc. | UMB Financial Corporation | $2,100.00 |
| Independent Bank Group, Inc. | SouthState Corporation | $2,000.00 |
| The General Automobile Insurance Services Inc. | Dairyland Insurance Company | $1,100.00 |
| Premier Financial Corp. | WesBanco, Inc. | $995.00 |
| CrossFirst Bankshares, Inc. | First Busey Corporation | $886.00 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Fentura Financial, Inc. | ChoiceOne Financial Services, Inc. | $180.00 |
| Traditions Bancorp, Inc. | ACNB Corporation | $87.00 |
| Northway Financial, Inc. | Camden National Corporation | 87.00 |
| ICC Holdings, Inc. | Mutual Capital Group, Inc. | $82.00 |
| Homeowners of America Insurance Company | Porch Insurance Reciprocal Exchange | $47.00 |
Other Financial Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Advantage Retirement Solutions, LLC | Apollo Global Management, Inc.; Athene Holding Ltd.; Motive Capital Management, LLC | n/a |
| Quickpay Funding, LLC | Culain Capital Management Llc | n/a |
| ManhattanLife of America Insurance Company | CC Capital Management, LLC | n/a |
| Badger Mutual Insurance Company | Rural Mutual Insurance Company | n/a |
Source S&P Capital IQ as of 4/17/2025 and PCE Proprietary Data
Emerging Trends
Key trends shaping Financial Services Firms & Banks:
- Strategic Consolidation
Banks are increasingly pursuing strategic acquisitions to enhance capabilities and footprints, particularly in areas aligning with evolving consumer preferences.1 - Emphasis on Cybersecurity
As digital transformation accelerates, banks are prioritizing cybersecurity measures, including AI-driven threat detection and zero-trust architectures, to protect against sophisticated cyber threats.3 - Payments Sector Attractiveness
The payments sector remains highly attractive for investors due to its scalability, lower regulation, and profitability compared to other parts of the financial services industry.4
Key trends shaping Insurance Services & Insurance Firms:
- Climate Risk Considerations
Climate change continues to influence M&A strategies, with insurers adjusting underwriting practices and capital reserves to mitigate associated risks.2 - Portfolio Optimization for Insurance Firms
Insurers are focusing on rebalancing portfolios for capital optimization, with many undergoing restructuring to align with strategic objectives.2 - Digital Asset Coverage Expansion
Insurers are developing new products to cover risks associated with cryptocurrency and blockchain technologies, reflecting increased client demand and sector innovation.8
Outlook for Next Quarter
Financial Services Firms & Banks:
Opportunities: The BaaS model is enabling banks to offer services through third-party platforms, expanding their reach and creating new revenue streams while reducing operational costs.5
Risks: Recent U.S. tariffs, including a 145% levy on Chinese imports, have escalated global trade tensions, leading to market instability and potential challenges for financial institutions.6
Predicted Activity: Private equity firms are anticipated to increase involvement in financial sector deals, leveraging market opportunities amid evolving economic conditions.7
Insurance Services & Firms:
Opportunities: The continued growth of Managing General Agents (MGAs) offers insurers flexible avenues to enter new markets and tap into niche opportunities, driving M&A activity in this segment.8
Risks: Evolving regulatory landscapes and increased scrutiny on underwriting practices may pose challenges for insurers seeking expansion through acquisitions.
Predicted Activity: A rebound in insurance M&A is expected, particularly in the U.S., as investor confidence grows and regulatory environments become more favorable.
PCE Transactions
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